Stereo Store Chain Settles Claim of Deceptive Advertising Out of Court

A large chain of electronics stores in San Diego County has agreed to pay $40,000 in penalties to settle a deceptive-advertising case, the city attorney’s office said Tuesday.

In a civil complaint filed simultaneously with a settlement declaration, Dow Stereo/Video was accused Tuesday of advertising “phony grand opening sales” at two locations during 1990 and 1991, said Deputy City Atty. Michael Rivo.

City attorney investigators claimed Dow used misleading advertisements to draw customers to stores that underwent extensive remodeling, but had been conducting business for more than 10 years. The stores are at 3445 Sports Arena Blvd. and 4404 El Cajon Blvd.

Dow president Michael Romagnolo agreed to the settlement without admitting wrongdoing, Dow attorney Ronald M. Frant said, adding that Romagnolo agreed to the settlement to avoid court costs.

The San Diego-based electronics chain ran newspaper, radio and television ads for four weeks during the purported “grand opening” periods, Rivo said. The company sought to hype the occasions, which in turn drew attention to sale prices being honored at all seven Dow stores in San Diego, Rivo said.

“Stereo sales is a very competitive industry,” Rivo said. “All the businesses are looking for an edge. At Dow, people were being lured into stores based on false statements.”

Frant said the alleged advertising violation was merely a discrepancy over “semantics”--the difference between a grand opening and a grand reopening.

“We disagree with the city attorney’s interpretation of an ‘opening,’ ” said Frant. “You don’t have to move to a new location to have a new store. We say full remodeling gives you the same thing. But we didn’t feel it was the best use of our time and money to devote it to litigating the meaning of ‘opening.’ ”

Frant said the interiors of the two stores were gutted and refurbished; the facades also redone. While one store closed its doors for a short period, items were sold on the sidewalk, he said.

The city attorney’s office also filed an earlier complaint against Dow, alleging three minor incidents of deceptive advertising, none of which involved the use of the words, “grand opening.” The 1987 case was settled for $5,750.

Rivo said the city attorney’s investigation of Dow in the most recent case found no evidence of willful deception. Nonetheless, Rivo sternly rebuked the company’s choice of wording in the advertisements.

“They’re going to characterize this one as an honest mistake,” Rivo said. “Dow knew these were not new stores. . . . If you remodeled your house, you wouldn’t expect guests to bring you housewarming gifts, would you?”

Tuesday’s settlement requires Dow to pay $35,000 in penalties to the city and county, and $5,000 for investigation and court processing fees.