State pursues businesses with bogus 'sale' ads

Jewelry store owner agrees to pay $50,000 for misleading sign

Posted: Wednesday, September 09, 2009

The state Attorney General's office is cracking down on misleading advertising aimed at cruise ship passengers shopping in Southeast's tourist districts.

Brian Wallace / Juneau Empire
Brian Wallace / Juneau Empire

The state filed lawsuits this summer against two separate jewelry store owners for displaying advertisements the state said were unfair or deceptive by making claims such as "70% off," "blowout sale" or "clearance" pricing, when regular prices for the items did not exist.

One defendant agreed to pay a $50,000 fine. The second case is still pending.

The state said the signs violate Alaska's Unfair Trade Practices and Consumer Protection Act and retail advertising regulations.

"Sometimes stores will do what essentially becomes a continuous sale," Assistant Attorney General Cynthia Drinkwater said. "If something is always on sale, then the sale price is the regular price. ... It's deceptive to the consumer because they think they're getting some sort of reduction when they're not."

Letters went out in April 2008 to store owners in tourist communities around Southeast that their advertising practices were in question, Drinkwater said, followed by additional correspondence when the state was able to determine signs were not taken down.

Some signs at Klassique Jewelers, owned by Bobby Jagtiani of Ketchikan and St. Thomas, U.S. Virgin Islands, were taken down after the store received the state's letter, but not all of them were removed, according to court records.

The state asked for documentation proving the advertised price was, in fact, a sale.

Jagtiani provided some records but settled the case by agreeing to a $50,000 fine in May. If he makes payments on time, $15,000 will be suspended.

Fines are set by each violation of the state law, and every sign constitutes a violation every day it is displayed, the state argued in court records.

Jagtiani said it isn't fair that he had to pay when "everyone" puts up signs. He said he felt like the state's "guinea pig."

Jagtiani started selling jewelry in Alaska 14 years ago. He has stores in Juneau, Skagway and Ketchikan.

"I feel that if I'm fined, everybody should be fined," he said. "None of my competition in Ketchikan got a fine, none in Skagway got a fine."

The state's second case is against Jewelers International, also on South Franklin Street. Owner Samuel Sengul declined to comment for this story, as did Drinkwater because the case is pending.

One South Franklin Street jeweler called the advertising tactics used by his competitors "a joke."

The signs create unrealistic expectations among customers, said Lambros Magiafas, owner of Lambros Goldsmith.

"It's frustrating because 80 percent off ... does not exist," Magiafas said. "Lots of people walk in and they expect that discount, but I can't do such a thing."

Magiafas said he noticed fewer discount signs this summer, but not many fewer. The state needs to do more enforcement, he said.

Pioneer Jewelers owner Penny Tripp agreed.

She did not notice a decrease in the number of signs this year.

Drinkwater would not discuss how the state investigates advertising practices.

"We do want to treat retailers similarly so if we're aware of businesses that are engaging in this kind of conduct, we will treat them in a similar fashion," she said.

There were dozens of "sale" signs on South Franklin Street on Tuesday. One store advertised "70% off everything" and another advertised "blowout sale, everything must go."

Jagtiani said he did not display signs at his Juneau store for most of the season and business was down 50 percent.

"It makes a big difference," he said. "People want deals, come on, it's a recession time."

The signs apparently work - at least for one couple that paused in front of a T-shirt shop Tuesday morning.

"They have no sale signs," the woman said as the couple strolled away and down the sidewalk.

• Contact reporter Kim Marquisat 523-2279 or e-mail

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