Montgomery Ward, Tandy and two other retailers have agreed to pay fines and change their advertising to settle an investigation by 23 states into zero-interest loans the companies offer.
Washington will receive $100,000 to pay legal fees and other costs stemming from yearlong negotiations that also involved Best Buy and CompUSA.
Attorney General Christine Gregoire said advertisements boasting zero-interest or no-interest financing attract consumers who may not know or understand all the conditions that apply.
For example, missing a payment or failing to fully repay a loan within a time limit could result in high interest charges.
“To prevent confusion, retailers must disclose the terms to qualify and tell consumers what it will cost them if they break those terms,” Gregoire said.
She said future advertisements will disclose the full purchase price, the types of payments required, and the consumer’s liability for all interest due if payments are not current or are not paid in full within the no-interest period.
That information and more about the financing programs also will be posted in the stores.
Gregoire said she hopes other retailers will follow the example established in the agreement.
“We will continue to look into this kind of advertising,” said Assistant Attorney General Lisa Sweeney, who stopped short of saying the lack of disclosure violated Washington’s Consumer Protection Act.
She said the companies that were parties to the agreement were selected because they have outlets in most of the states where officials were troubled by zero-interest financing programs.
The companies will pay a total of $925,000 in fines and costs.
Tandy, which operates Radio Sack stores, issued a statement saying its advertisements already have been an excellent example for the retail industry.
The attorney’s general, Tandy said, assured the company it would be at no competitive disadvantage by adopting the new standards.
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