Appliance Chain Settles Suit Claiming False Advertising Over Use of the Word Sale : Litigation: Executives of Anaheim-based Phil & Jim’s agree to pay fine but do not admit wrongdoing.
Phil & Jim’s, a 40-year-old TV and appliance retailer, has settled a lawsuit alleging that it falsely advertised merchandise at “sale” prices, the Orange County prosecutor’s office said Wednesday.
The company, based in Anaheim, agreed to pay a $15,000 fine and abide by restrictions on the use of the word sale , but executives did not acknowledge any wrongdoing, said Charles Benninghoff, a San Juan Capistrano lawyer who represents the 10-store chain.
“The cost to prove that Phil & Jim’s (did nothing wrong) would be 10 or more times what the settlement was,” Benninghoff said. “That’s the only reason the client agreed to the stipulation.”
The settlement might force other retailers, too, to change how they advertise, said Phil Delgado, president of Phil & Jim’s. Retailers, he said Wednesday, “are going to get away from the four-letter word sale . . . . You’ll see other words like blow-out clearance and inventory eduction .”
Senior Deputy Dist. Atty. Jane Shade maintained in a civil lawsuit initiated more than a year ago by the prosecutor’s office that Phil & Jim’s wrongly advertised merchandise at “sale prices” because goods were “always on sale. . . . The sale price became the regular price.” The chain’s advertising constituted unfair competition, Shade said, because it misled customers and “cheated retailers who advertised honestly.”
But Benninghoff maintained that Phil & Jim’s advertising is “exactly the same as it was in the early 1960s, and I know of no public agency that’s ever received a single consumer complaint.”
The lawsuit underscores the importance of comparison shopping, said Gail Hillebrand, litigation counsel for San Francisco-based Consumers Union, which publishes Consumer Reports magazine.
“Our advice is to look beyond (an advertisement) to see what others are charging for the same product,” Hillebrand said. “Call for comparisons. It’s important that you know the model number so you can compare the same product.”