A New York court ordered Maddy's Home Furniture and More, LLC to pay more than $2 million in penalties and restitution, after the the New York City Department of Consumer and Worker Protection sued the furniture chain, alleging that the company lured consumers to its stores with deceptive financing offers.
The DCWP sued the company in 2018 -- which operates Maddy's Home Furniture, Dubai Furniture, Furniture Saving, Burnside Furniture, La Reina Furniture, and El Rey Furniture -- after the agency received numerous consumer complaints. The lawsuit alleged more than 3900 violations of New York City's Consumer Protection Law. In the lawsuit, DCWP alleged that even though Maddy's made claims such as "24 MONTHS ZERO INTEREST - NO CREDIT CHECK" and "NO CREDIT? BAD CREDIT? NO PROBLEM YOU'RE APPROVED," various consumers weren't able to take advantage of these offers. DCA alleged that these claims were made on Maddy's website, in social media, and in other channels. DCA also alleged that Maddy's delivered used or damaged furniture and delayed delivery of furniture for months, despite promises of fast delivery.
New York County Supreme Court ordered Maddy's and affiliates to pay $250,000 to a consumer restitution fund that will be administered by DCWP and $1,963,500 in civil penalties.
As part of the announcement of the decision last week, DCWP Commissioner Lorelei Salas said, "Buying furniture is not a small investment -- in fact U.S. consumers spend about $100 billion at furniture stores annually. We are pleased that the judge recognized Maddy's egregious conduct and ordered them to create a fund for consumer restitution for the hundreds of consumers who were wronged by their predatory practices." (Salas' last day as Commissioner was April 30th.)
This case is a great reminder to companies operating in New York City that, in addition to federal and state law, they're also required to comply with New York City's own Consumer Protection Law. And, whether you're operating in New York City or not, this case also highlights the fact that civil penalties that a marketer is required to pay in a false advertising case can greatly exceed the damages actually suffered by consumers.
This alert provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.
