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Post date: September 19 2011

A.G. Schneiderman Secures $1.8 Million From Michaels Stores For Misleading Consumers

AG's Investigation Of Continuous "Sale" Secures $1.8 Million, Including $1 Million For Public Schools Statewide

Schneiderman: For Years, Consumers Were Deceived Into Thinking They Were Receiving Huge Discounts When They Were Paying Regular Prices


ROCHESTER - As students and teachers returned to school this month, Attorney General Eric T. Schneiderman today announced that retail chain Michaels Stores, Inc. has agreed to enter a $1.8 million settlement for engaging in deceptive advertising practices by misleading consumers into thinking they were receiving steep discounts over a two year period. As part of the settlement, the company will change its advertising practices and contribute $1 million in art and craft supplies to public schools throughout New York State, in addition to $800,000 in civil penalties.

"For years, Michaels duped consumers into thinking they were receiving huge discounts, when in fact, they were simply paying the regular store price," said Attorney General Schneiderman. "Through deceptive advertising practices, this company violated the law and took advantage of hardworking consumers trying to save money.  In addition to the civil penalties, the company is paying for their actions by providing $1 million in school supplies for hundreds of school districts statewide."

Michaels Stores, Inc. describes itself as a specialty retailer of arts, crafts, scrapbooking and custom framing.  Its 48 stores throughout New York State are frequented by parents, students and teachers to purchase school supplies.

As a result of the Attorney General's settlement, Michaels will be required to give back to the public schools in communities which their stores are located. Today's action will benefit as many as 724 school districts throughout the state. The schools are set to receive $1 million in gift cards to purchase supplies.

The investigation began in 2009 when the Attorney General's office began tracking the 50 percent off marketing materials where Michaels advertised its "Custom Framing" as a sale product for at least 104 consecutive weeks.  The law prohibits sales that are never ending. Investigators throughout the state collected newspaper flyers, online flyers, in-store banners and signs advertising the custom framing. Michaels advertised in at least one of these forms every day for two years. The ads stated that custom framing was either at least 50 percent off or a certain dollar amount off. 

Michaels has agreed to settle the investigation by paying civil penalties of $800,000 in addition to the $1 million to New York's public schools for violating General Business Law (350-D) for False Advertising.

The case was handled by Assistant Attorney General Benjamin Bruce under the direction of Assistant Attorney General In-Charge of the Rochester office, Debra Martin and Executive Deputy Attorney General for Regional Affairs, Martin J. Mack.


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