Last month, Ohio, along with nine other state attorneys general (collectively, the AGs) entered into an assurance of voluntary compliance (AV) with Menard Inc. d/b/a Menards, a Wisconsin-based home improvement retailer. The settlement resolved the AGs’ allegations concerning deceptive rebate advertising and price gouging during the COVID-19 pandemic. Menards will pay $4.25 million to the multistate group, in addition to making several changes primarily related to the company’s rebate and advertising business practices.
Specifically, the AGs contended that Menards failed to disclose material limitations of its merchandise credit check (MCC) program, which provided consumer savings through store credit for future purchases. The alleged omissions included a failure to disclose that the MCC is an in-store credit on a future purchase as opposed to a discount on the items at the point of sale, that the credit was redeemable only in person at physical store locations, and that customers were required to mail in a rebate submission form to be eligible. The AGs claimed that Menards advertised the MCC as an instant price cut and listed prices in publications that reflected the prices of goods after the credit redemption rather than the price a consumer paid at the register.
Menards denied that its advertising was false, misleading, or confusing to customers, noting that its rebate sales are popular with, and beneficial to, participating consumers.
The AVC prohibits Menards from representing that its MCC program provides a point-of-purchase discount or cash back on a purchase. The AVC further requires the disclosure of specifically identified, material limitations of the MCC program and enactment of certain terms related to the MCC program. These terms include allowing customers 12 months to submit a rebate claim and posting in an online rebate portal that the claim is “in process” within 48 hours of the submission of a complete MCC rebate application. Menards is also required to investigate whether consumers can safely submit rebate requests online and redeem them for online purchases. Finally, Menards is prohibited from engaging in “price gouging” during a period of abnormal economic disruption, such as the COVID-19 pandemic. Menards will also pay $4.35 million to the participating states, which will be divided among them.
This investigation highlights a continued focus on allegedly misleading advertising and promotional programs. Longevity and familiarity by consumers with the program does not necessarily mean that the program is not deceptive or misleading in the eyes of the regulators. Although Menards’ program has been in effect for more than a decade, and even though most Menards customers are familiar with the company’s unique rebate program, the threat of investigations and enforcement action from regulators policing compliance with state law remains. Companies should routinely evaluate their business practices to ensure compliance with both established laws and emerging regulations to stay ahead of enforcement trends.
