State AG files lawsuit against Value Village alleging widespread deception

  • Thursday, December 21, 2017 10:50am
  • News

Staff Report

Washington state has filed a lawsuit against the company that owns Value Village, alleging the Bellevue-based company TVI, Inc. lied to customers and donors for more than a decade.

TVI is a for-profit thrift retailer, and the largest one in the world. It generates more than $1 billion in revenue and runs 330 stores worldwide, a press release from state Attorney General Bob Ferguson said.

The lawsuit was announced on Dec. 20 and was filed in King County Superior Court.

The 37-page complaint contains pictures of advertisements used in the state and details what the state alleges is “widespread deception created by Value Village’s aggressive marketing campaign.”

These involve lying to customers and donors that all of their donations and purchases benefited charity, which the state said created an impression that Value Village — which has locations in Redmond and Kirkland — was a non-profit or charity.

Furthermore, the complaint alleges that no portion of in-store sales benefited charities, and that some types of donations, like furniture and houseware, didn’t benefit charity at all.

Some other donations provided less benefits to charity than was advertised or went to charities not indicated to those making donations, the complaint alleges.

“In many cases, the donations were in reality pooled and shared among multiple charities,” a press release from Ferguson said.

The complaint centers around alleged violations of the Washington state Consumer Protection Act, prohibiting unfair or deceptive conduct by retailers. It also cites violations of the Charitable Solicitations Act, barring false, misleading or deceptive charitable solicitations.

“If a for-profit company asked you to donate your couch so it could donate zero dollars to charity, you might think twice and decide to donate your couch to an actual charitable organization,” Ferguson said in the release. “Value Village made millions by deceiving consumers and donors.”

Value Village responded to the allegations in a statement issued by Sara Gaugl, a spokesperson for the company.

“We are aware of the Complaint from the Office of the Washington State Attorney General and are reviewing its details. For the last several years, we have addressed questions from the Attorney General’s Office and continue to believe their actions are misguided,” the Value Village release said. “We are fully compliant with all relevant Washington state laws and are confident this matter will be resolved in our favor.”

The company filed a counter-suit on Dec. 11 in anticipation of the state’s suit, the release said.

The Value Village press release said the company believes the state’s position consists of “unlawful demands that threaten to undermine our ability to support our Washington state charitable partners.”

However, according to the state lawsuit, Value Village claimed that every donation went to local nonprofits.

Ferguson’s office gave an example that they allege disproves this, such as in 2015 when no money was given to charities for donations of “hard items” such as furniture, housewares and toys.

After an investigation was launched the same year, the company began paying charities for those items at “typically pennies per item,” the release said.

Reimbursement rates included 4 cents per pound of soft goods, and 2 cents per pound for a variety of items such as housewares, toys and books. Furniture and other larger items only saw 2 cents per item donated.

The state lawsuit alleges these amounts were far lower than the impression created by Value Village advertisements.

The lawsuit further alleges this was a deceptive practice and broke the law.

Other violations include Value Village using logos of charities they had formerly worked with but whose funding agreements had expired in the company’s advertising.

One example included an agreement Value Village had with the Moyer Foundation, where the company agreed in 2005 to donate 4.3 cents per pound of clothing donated to three Washington stores.

The agreement expired in 2006, but Value Village continued to include the Moyer Foundation logo until 2015 when the Moyer Foundation discovered it, the complaint said.

In a survey of state residents, more than 75 Washingtonians in a test group believed Value Village was a charity or nonprofit. More than 90 percent of the test group overestimated the amount of money the charity would receive, sometimes believing that more than one-third of an item’s sale price would go to charity.

Many times, the complaint alleges, no portion of the sale went to charity.

The state’s lawsuit seeks a court order barring Value Village from making misleading statements to customers, including which charities benefit, the amount of donations benefiting charities and that in-store sales benefit charity.

TVI, Value Village’s owning company, has 20 days to respond to the complaint.

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