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Home Depot wins challenge to hhgregg price claims

Consumer Reports News: January 18, 2012 10:58 AM

If you're already skeptical about the truth and accuracy of sales promos you see in newspaper flyers and weekly circulars, a decision released this week by the Better Business Bureau's National Advertising Division (NAD) won’t make a believer out of you. According to the watchdog agency, consumers who bought certain LG appliances from retailer hhgregg did not save $250 to $300 as advertised, since those promised savings were based on inflated suggested retail prices.

The challenge was brought by the Home Depot, which fared slightly better than hhgregg in Consumer Reports' latest survey of appliances retailers (read “Where to buy appliances?” for the details). In its challenge to the NAD, Home Depot asserted that the following savings claims mislead consumers:

  • LG Electronics 30in. Self Cleaning Freestanding Convection Range in Stainless Steel “SRP $1099.99, save $245.99, final price $854.00”
  • “LG 30.7 Cu. Ft. Stainless Steel French Door Refrigerator SRP $3299.99. Now $2999”

Home Depot argued that the suggested retail prices listed in the advertisements were at least 10 percent higher than the bona fide prices for the appliances on the market. The Federal Trade Commission expressly prohibits the use of inflated prices to create fictitious price reductions.

In its rejection of the allegations, hhgregg claimed that it never intended to mislead consumers. The retailer said any erroneous pricing was either the result of an inadvertent oversight or a late change to the suggested retail price by the manufacturer. However, it did agree to permanently discontinue the challenged claims and initiate a complete review of its advertising policies and procedures.

In the end, this incident might actually give you faith in weekly circulars. After all, it’s nice to know these sales promos are governed by strict guidelines and carefully watched by the competition.

But what about the performance of the LG appliances in question, which gets to the issue of whether the products featured in sales promos are any good? The convection range doesn’t appear to be in Consumer Reports’ latest Ratings of ranges (the decision doesn't mention model numbers). The French-door bottom-freezer is in our refrigerator Ratings, however, and it makes our recommended list behind very good temperature performance, ease of use, and energy efficiency. Better yet, several retailers are selling it for $2,879, or $120 less than hhgregg’s listed sale price. Go figure.

Daniel DiClerico

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