The Maryland Attorney General's office yesterday filed a lawsuit against The Hecht Co., charging it with using unfair and deceptive advertising practices to mislead consumers into believing that they are getting bargains on purchases of mattresses and other consumer goods.
Hecht's -- the biggest department store chain in Maryland -- immediately denied the charges, and in what lawyers called an unusual maneuver, filed a lawsuit against Attorney General Stephen H. Sachs to bar his office from proceeding with its investigation and lawsuit.
Saying it is confident that "our longstanding pricing policy fully complies with all applicable state and federal laws," the 24-store chain asked a Maryland court in Prince George's County to find Hecht's advertisements legal and bar the state from proceeding to prosecute the chain. The suit was filed on behalf of Hecht's, which also has stores in the District and Virginia, by its parent company, May Department Stores Co. of St. Louis.
The state's charges, contained in a nine-page suit filed in the Maryland Circuit Court in Montgomery County just 24 minutes before Hecht's filed its lawsuit, centered on advertisements for mattresses from May 1984 to the present.
According to the attorney general's lawsuit, Hecht's used fictitious prices in its sales promotions "to create an illusion of dramatic savings and significant bargains which, in fact, do not exist."
The company did so by comparing its sales price with a "regular" price, the suit said. The regular price "was a fictitious price and was not a price at which the applicable mattresses and box springs had been openly and actively offered to the public, honestly and in good faith," the suit charged.
In addition to seeking a ban on Hecht's allegedly illegal ads, Maryland is also asking Hecht's "to restore to all consumers all money acquired from them by means of Hecht's illegal actions." The suit said Hecht's, which has 17 stores in Maryland, sells $11 million in bedding yearly. However, the attorney general's office said, it was unclear how much of this should be returned to consumers if a judge rules in the state's favor.
Maryland is seeking civil penalties on the retailer for each violation of the state's consumer laws. By law, the fine is $300 for each violation committed before June 1985, and $1,000 for each subsequent violation as a result of recent changes in Maryland's consumer protection laws.
Hecht's and its parent company May, however, said its pricing policies were legal.
"May has a policy that no merchandise is advertised at a sale price unless it is offered at the regular price for at least 10 days before the sale," the company said in its lawsuit against Sachs. "Thus, with respect to all mattresses which, in fact, are advertised to the public in Maryland, May has a policy that no mattress will be advertised as 'on sale' unless it has been advertised at the 'regular price' for at least 10 days."
In a statement announcing the lawsuit, Sachs said, "It is fraudulent for a retailer to claim as its regular price a price at which it never sold the goods. Our investigation revealed, and we allege, that the price comparisons employed by Hecht's week after week in its massive advertising campaigns in Maryland contained blatant falsehoods. People reading the ads were led to believe that great bargains could be had, when this simply wasn't true."
The suit said that last February in The Washington Post, Hecht's advertised a 50-percent reduction, plus a "bonus" 10-percent reduction, for a Sealy "Posturepedic Ultra I" mattress. The advertisement showed a current price of $188.99 for a full-size mattress, reduced from a "regular" price of $420 -- a discount worth 55 percent. But, "the 'Ultra I' had never been sold by Hecht's at the supposed higher 'regular' price, and in fact, in 36 of the 40 weeks preceding the ad, the mattress had been offered by Hecht's at prices between $188.99 and $209.99," the suit said.
Although Maryland's lawsuit focused on the company's mattress advertisements, it said that it believed the same promotional practices were used "with respect to the sale of consumer goods other than mattresses."
"Based on information we have now, there may be similar problems with other products," commented Assistant Attorney General James P. Abbott, who signed the lawsuit. "Jewelry or silverware are possible problem areas," he said.
The state would know if other products are involved, however, only after reviewing company documents that it hopes to obtain through future legal proceedings, he said.
In addition to advertising allegedly fictitious "regular" prices in its ads, Maryland also charged Hecht's with running special sales events, promoting bargain prices although those sales prices were "at the same price, or at virtually the same price, at which the goods had been offered to the public in the recent past."
In July 1984, the company held a special 3-day "Public Sale," during which it offered a full-size Serta mattress for $209.99. That price "was $30 higher than any price at which the mattress had been offered" during the four months preceding the sale.
Abbott said the Hecht's investigation began 16 months ago after the attorney general's office received complaints from the company's competitors.