The issue was the company's use of the phrase 'regular prices.'
ALBANY, N.Y. (AP) -- A national department store chain has agreed to pay $400,000 to end an investigation into claims that it advertised deceptive sale prices on items ranging from watches to outdoor grills, Attorney General Eliot Spitzer said.
Kaufmann's, a division of the May Department Stores Co., based in St. Louis, will end the practice of advertising long-standing "sales" prices while the stated "regular price" was rarely or never charged, Spitzer said.
Kaufmann's, which is based in Boston, operates 51 stores in New York, Ohio, West Virginia and Pennsylvania.
"Phony sales can lure customers away from competitors and trick consumers into making unwise decisions," Spitzer said.
Similar consumer protection investigations are underway with other stores, said Spitzer spokeswoman Christine Pritchard, who declined to identify the stores.
The chain cooperated with Spitzer's office and will pay $50,000 to cover the cost of the state investigation and $350,000 in civil penalties to the state. Kaufmann's denies it engaged in any deceptive practices, according to the settlement.
"We signed the assurance with the state of New York to reaffirm our continuing intent to remain in compliance with New York advertising laws," Kaufmann's spokeswoman Sharon Bateman said.
State investigators found Kaufmann's sold 1,800 outdoor grills over eight months at a sale price. Similar sale prices were advertised for a watch and a coffee maker. Kaufmann's also sold a KitchenAid mixer at a sale price of $169 for 28 straight weeks. Its regular price was listed at $219. For 16 weeks, an entertainment wall center was sold on sale for $2,999, while its regular price was listed at $4,350.
Sales records showed many items never sold at the stated "regular price," state investigators said. Spitzer had accused Kaufmann's of violations of state business law concerning false advertising and fraud.
Spitzer had signed similar agreements with The Bon-Ton department stores in 2002 and with Jos. A. Banks Clothier in September.