Consumer Affairs Commissioner Jules Polonetsky Short Circuits
Electronics Giant for Illegal Return Policy
DCA Commissioner Takes Enforcement Action Against Circuit City Electronics,
Demands Refunds For Consumers Socked With 15% 'Restocking Fee'
Circuit City Electronics -- the nation's largest electronics chain -- broke the law and ripped off consumers returning unused merchandise, Consumer Affairs Commissioner Jules Polonetsky announced today. Commissioner Polonetsky also demanded full refunds to all consumers charged with a 15% "restocking fee."
Following a comprehensive investigation, the Department of Consumer Affairs (DCA) served the electronics giant with over 80 counts of violations -- carrying potential fines of more than $30,000 -- for failing to properly disclose its return policy, posting conflicting return policies and publishing misleading advertisements.
"Consumers shouldn't have to be detectives to find out a store's return policy," said Commissioner Polonetsky. "But at Circuit City, they would need a map and a magnifying glass to see, let alone understand, the terms imposed on unwitting consumers. The nation's largest electronics store -- worth in excess of $3.4 billion -- should be able to get the law straight: the terms of a return policy have to be made known at the point of sale. Since is was not clearly posted, consumers are entitled to their money back."
Consumer Affairs began investigating Circuit City upon reports from consumers that the electronics chain was charging them a "restocking fee" to return all merchandise -- even with the receipt -- where the box had been opened. Though the Consumer Protection Law allows merchants to institute any return policy they choose, it also specifies this policy must be made clear to the consumer when they purchase the item, either at the cash register, at the store's entrance, or on the item itself. DCA, which licenses and regulates New York City electronics stores, found after repeated visits to the premises that Circuit City's two New York City stores had not posted adequate signs explaining the return policy and that the signs they did post contained conflicting and confusing information.
"Many people buy expensive gifts for family and friends, and it's often a gamble whether the present will be appropriate," said Commissioner Polonetsky. "So if, for example, a consumer returning a $2000 personal computer knew in advance that there would be a $300 charge for just opening the box, I'm sure that person would have seriously considered shopping somewhere else."
In one store, located at 625 Atlantic Avenue in Brooklyn, inspectors found only one posted sign pertaining to Circuit City's restocking fee policy, even though cash registers were located throughout the store. The other store, located at 112-01 Queens Boulevard in Rego Park, contained three signs explaining the policy but which were not visible from the cash registers.
In addition to the violations for inadequate disclosure, DCA inspectors also issued violations to Circuit City for posting conflicting return policy information. In both the Queens and Brooklyn stores, inspectors found three different versions of the return policy displayed. Only one of the signs specifically mentioned the 15% restocking fee; another mentioned an "additional charge" for returning opened merchandise and fees for missing accessories; and the other dealt specifically with compact discs, videotapes, and computer software.
Inspectors also cited Circuit City for deceptive advertising claims relating to its policy on "price matching" and "lowest price guarantees." Inspectors found that the electronics store was confusing customers by interchanging these two contradictory policies.
"Our inspectors have uncovered a pattern of deception on the part of Circuit City," said Commissioner Polonetsky. "In-store signs and newspaper advertisements convey conflicting and confusing information, making it nearly impossible for consumers to make an informed decision about how to spend their money."
The violations issued are hearable in front of an Administrative Law Judge. A hearing has been scheduled for January 28, 1998. If found guilty, the violations carry maximum fines of up to $350 per count.
Commissioner Polonetsky urged consumers who have complaints against Circuit City, or any other electronics store in New York City, to file a complaint with DCA by calling (212) 487-4444, or visiting our website at www.ci.nyc.ny.us/consumers.
New York City Staff Menber