Hobby Lobby Stores Inc. reached a settlement with New York's attorney general to resolve an investigation into whether the arts and crafts chain falsely advertised "never-ending" sales.
The Oklahoma City retailer agreed to pay $85,000 in civil penalties and distribute $138,600 in gift cards to 689 schools in upstate New York, according to a statement Thursday from New York Atty. Gen. Eric T. Schneiderman.
The privately held company also must change its advertising practices over the next 60 days.
New York officials began investigating Hobby Lobbby's advertising last year after learning the company offered discounts of up to 50% on items year-round. Sales that are never-ending violate the state's false advertising law.
“When companies mislead customers by advertising never-ending sales, our office will hold them accountable,” Schneiderman said in statement. “Ultimately, a permanent sale is no sale at all.”
Ashley Wilemon, a spokeswoman for the company, said Hobby Lobby strongly disagreed with the allegations but that "we are pleased that the resolution of the attorney general's claims provides an opportunity to contribute to the needs of teachers and schoolchildren in New York."