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Conn's Reaches $4.5M Settlement With Texas AG

11/24/2009 06:45:48 PM Eastern

Beaumont, Texas - Conn's has agreed to pay customers $4.5 million to settle a six-month-old lawsuit by the Texas attorney general charging the chain with deceptive trade practices.

The 76-store CE, appliance and furniture dealer had denied the allegations â€” which included using misleading and high-pressure sales tactics and failing to fully honor extended-warranty agreements â€” and continues to deny any wrongdoing.

In a statement, Conn's president/CEO Tim Frank said the suit was without merit, but that it was in the best interest of the company to resolve it before the holiday selling season.

"While we continue to feel this suit ... should never have been brought, we also felt it in the best interest of our employees and their families that we put this matter behind us. Having entered the busy holiday shopping season, which arrived during a difficult time for our nation's economy, resolving this suit now allows us to focus on providing quality merchandise to our customers at prices and on terms that help make their dreams become reality. "

According to Texas Attorney General Gregg Abbott, investigators found that Conn's failed to provide customers with a copy of the warranty agreement at the time of sale, which would have informed them of exclusions, limitations, cancellation penalties and other provisions of the contract. Complaints obtained by Abbott's office also indicated that Conn's delayed repair appointments for weeks or even months, failed to repair items to working condition, ignored calls, and ultimately refused to give refunds or replace the defective products.

Abbott also accused Conn's of instructing its sales personnel to use "high pressure" tactics to sell extended warranties.

As part of the settlement, Conn's agreed to provide customers with copies of the warranty agreement and brochure at the time of sale; to refrain from adding extended-warranty or credit-insurance products to customers' invoices without their written consent; and to immediately replace products that fail within 72 hours of delivery.

Conn's chairman Dr. William Nylin told TWICE the company has been providing customers with copies of their warranty contracts since June, and that its service call metrics of 1.5 days out and a nine-day completion time are among the best in the industry.

He added that Conn's enjoys a customer-satisfaction rating of more than 90 percent.

In addition to the $4.5 million that will be returned to customers through a restitution fund, Conn's has also agreed to pay the attorney general's office $250,000 in attorney's fees and costs, and to donate $100,000 to the University of Houston Law School's Consumer Law Center.

 

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