Deceptive Business Practices

The Texas Attorney General filed a lawsuit on May 28, 2009 against Conn’s, Inc., the consumer electronics and home furnishings retailer. The lawsuit alleges Conn’s has violated the Texas Deceptive Trade Practices Act (more commonly referred to as the “DTPA“). The DTPA is a Texas law which is to protect consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty and to provide efficient and economical procedures to secure such protection. The Attorney General has alleged that Conn’s Inc. has:

1. failed to honor product warranties, misleading customers about products, false advertising and encouraging employees to use “high-pressure tactics” to sell those warranties;
2. distributed brochures claiming that replacement warranties will protected the consumer for purchases “for a two full years from the date [they] purchased the product.” But the state said customers didn’t actually receive two-year warranties and stores failed to provide customers with a copy of the agreement at the time of sale;
3. failed to “adequately inform [the customers] about exclusions, limitations, cancellation penalties and other provisions governing their warranty agreements.”
4. delayed repair appointments for weeks or even months, failed to repair the item to working condition, ignored calls, and ultimately, refused to give refunds or replace the defective products.
5. repaired or replaced goods with refurbished goods, instead of new products, as promised.

The warranties at issue range in cost from $100 to $1,000, depending on the product. The State claims that the sales associated were compensated for selling them, and that the sales associates were instructed to “create a sense of urgency” and paint a negative picture of what a customer would face without a warranty when something went wrong with the product in order to encourage sales of the warranties.

The state is seeking civil penalties and a court order prohibiting Conn’s stores from continuing its unlawful conduct. The Attorney General seeks civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act. In addition, the state is seeking a $250,000 penalty if Conn’s conduct financially harmed persons aged 65 or older.

Businesses in Texas owe their customers an obligation to conduct their business in a fair and honest manner, and can be held liable for the damages they cause as a result of their false, misleading, and deceptive business practices. In this case, the Texas Attorney General is stepping in to try to protect consumers from what it sees as a series of violations of Texas law. However, individual consumers have the right to demand that the companies they do business with comply with Texas law. In addition to the actual damages that a consumer can recover in the event of such a loss, the company can be penalized and made to pay up to three (3) times of the actual damages, plus reasonable attorney’s fees and costs of court. If you have a consumer transaction where you feel that you were treated unfairly or where you were not delivered the goods or services that you were promised, contact Rachel Montes or Tom Herald at Montes Law Group, P.C., attorneys in Irving, Texas, to discuss your case and your rights.