Retailers Face Legal Woes Over Taxes, Ads And Ageism

By Alan Wolf On Jan 6 2005 - 8:00am




Some retailers may have been naughty rather than nice in their business practices, based on recent lawsuits filed against some of the largest chains in CE.

In a flurry of recent actions, Best Buy, Circuit City, Wal-Mart, Target and Office Depot have been the object of complaints ranging from unpaid taxes and age discrimination to deceptive advertising.

The latter was allegedly committed by Circuit City, which, according to New Jersey State Attorney General Peter Harvey, failed to provide specifics in its zero-percent financing promotions, ran sales on unavailable items, and refused to honor rebates and warranties. The chain's 16 Jersey stores generated 75 complaints over the past four years, 27 of which have been resolved, the state Division of Consumer Affairs said. But the purported financing faux pas also violated a 1996 agreement over the same issue, when Circuit paid $225,000 to New Jersey and several other states, and promised to make “clear and conspicuous disclosures” in future ads touting zero-percent financing.

Meanwhile, archrival Best Buy is facing an age discrimination suit by former information technology employees who were laid off after the retailer outsourced most of its IT functions to Accenture last summer. The suit alleges that more than two-thirds of the downsized were age 40 or older, even though most IT staffers tended to be younger.

Neither Circuit nor Best would comment on the pending litigation.

Meanwhile, the online arms of Wal-Mart, Target and Office Depot (and its affiliate, Viking Office Products) agreed to pay the State of Illinois over $2.4 million in back taxes that they failed to collect on e-tail sales, according to the state's Attorney General Lisa Madigan. The companies claimed the e-commerce entities were separate out-of-state operations, but Madigan said they established an Illinois presence when their brick-and-mortar stores accepted merchandise returns.

And speaking of returns (see story below), New York Sen. Charles Schumer took 200 Big Apple retailers, including KB Toys, to task last month for maintaining secret “blacklists” of consumers who make excessive returns. Retailers have begun monitoring returns, either internally or through a firm called The Return Exchange, to help stem the estimated $16 billion they lose annually in fraudulent returns of stolen merchandise. But Schumer said the policies are too arbitrary, fail to protect privacy, and are unfair to customers who haven't been warned in advance.

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