Schneiderman announces settlement with Sears over deceptive refund policy

Sears to pay $150k fine to New York after improperly reducing refunds to customers who had been given award cards as part of "Come Back Cash" promotion

Attorney General Eric T. Schneiderman announced this week that his office reached a settlement with Sears, Roebuck and Co. over a refund policy the retailer applied to consumers who participated in its "Come Back Cash" promotion. In the promotion, a consumer who purchased merchandise above a "qualifying threshold" amount was given a $10 or $20 promotional award card. However, if the consumer later returned some of the merchandise, Sears reduced the refund by a pro-rated amount of the value of the award card, even if the cost of the unreturned merchandise remained above the qualifying threshold and/or if the customer did not cash in the award.

The company has agreed to pay $150,000 in fines and has already reformed the policy. The multi-national retailer, headquartered in Hoffman Estates, Ill., operates 45 stores in New York. 

"This settlement ensures that consumers who participate in a promotion of this type and later return merchandise will receive a full and fair refund - and not a penny less," Schneiderman said. "Sears' refund policy improperly reduced refunds to customers whose purchases stayed above the qualifying threshold in the promotion, or whose promotional award card had already expired without being used." 

The attorney general's investigation revealed there were a total of 25,998 transactions involving New York consumers whose refunds were improperly reduced, and that Sears reduced the refunds issued to those consumers in the total amount of $82,825.62. 

From August 2010 through October 2012, Sears advertised and conducted a "Come Back Cash" promotion in which consumers who purchased merchandise valued at or above a "qualifying threshold" received an award card that could be used to purchase additional merchandise at Sears outlets. Depending on the promotion, the qualifying threshold for purchases was either $50 or $100, and the Sears award card that was given to consumers was worth either $10 or $20. The award card expired between eight and 15 days after the date of purchase.

Consumers who returned merchandise that had qualified them for an award card had their refund reduced by Sears in an amount equal to all or part of the award card they had received. This policy was enforced by Sears even if, after the return of merchandise, the consumer's purchases remained above the qualifying threshold. The policy was also enforced even if the consumer had not used the award card and the deadline for redeeming the card had already expired.

The attorney general's investigation was triggered by a complaint from a consumer who purchased seven items at the Sears in White Plains totaling $164.65. This qualified the consumer for $10 award card. The consumer later returned three items totaling $29.97, leaving her total purchases at $134.68 - well above the $50 qualifying threshold. Nonetheless, Sears deducted $3.67 from the refund and returned only $26.30 to the consumer.

Sears cooperated fully with the attorney general's investigation and changed its return policy prior to reaching a formal settlement with the attorney general.

Pursuant to the settlement, in any Sears promotion in which consumers who purchase merchandise valued at or above a qualifying threshold are given an award card or gift card:

•Sears shall not reduce the refund to any consumer who returns merchandise, if, after the return, the total purchase price remains at or above the qualifying threshold of the promotion that originally qualified the consumer for the award card;

•Sears shall clearly disclose, in all relevant promotional materials and advertising, that refunds will be reduced only if the purchase price falls below the qualifying threshold amount; and

•Sears shall not reduce the refund of any consumer whose award card was unused and expired by the time of the return.

The case was handled by Assistant Attorney General Judy S. Prosper and Assistant Attorney General-in-Charge Gary Brown of the Westchester Regional Office, under the supervision of Martin J. Mack, executive deputy attorney general for regional affairs.

For information about a wide range of consumer issues, see the attorney general's website at www.ag.ny.gov. To file a complaint, individuals are directed to call the attorney general's consumer helpline at 800-771-7755.