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 — which included
using misleading and high-pressure sales tactics and failing to fully honor extended-warranty
agreements — 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.
