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(SAN DIEGO) – Attorney General Bill Lockyer today announced Ralphs will pay victim restitution and civil penalties under a court judgment that resolves allegations of deceptive advertising and unfair businesses practices in connection with the supermarket's "Great Escape" travel promotion.
"This resolution will provide thousands of ‘Great Escape' victims what they bargained for and were denied: a free stay in a nice hotel," said Lockyer. "Just as important, the judgment requires Ralphs to better protect consumers by reforming the way it conducts similar promotions in the future."
The judgment approved today by San Diego County Superior Court Judge John Einhorn resolves a lawsuit filed by Lockyer that alleged Ralphs violated state laws prohibiting unfair competition, and false or misleading advertising. Lockyer's complaint and the judgment were filed simultaneously with the court.
The victim restitution will come in the form of a three-day, two-night stay in any Marriott-owned or operated hotel. These "Marriott Flex Awards" will go to Ralphs customers who fulfilled the requirements to win a two-night hotel stay in the Great Escape promotion, and who applied for but did not receive their award. Consumers will be eligible for the restitution regardless of whether they accepted substitute coupons toward a hotel stay, offered by Ralphs in lieu of the promised prize.
Additionally, Ralphs will pay $125,000 in civil penalties and $100,000 to reimburse the Attorney General's Office for its investigative costs.
Aside from the monetary provisions, the judgment includes "injunctive relief" that requires Ralphs to reform how it conducts travel promotions. Under these provisions, Ralphs must: disclose in a "clear and conspicuous manner" all terms, conditions and restrictions governing travel promotions; provide advertised travel to all customers who comply with the terms and conditions; and adequately investigate the ability of third parties with whom Ralphs contracts to fulfill the store's obligation to provide advertised travel.
Further, the judgment prohibits Ralphs from requiring customers to waive their legal rights without at least providing advertised travel, when customers have fulfilled eligibility requirements. Ralphs also cannot disclaim liability for not providing advertised travel to eligible customers.
Entry of the judgment resolves one of the more serious Southern California consumer protection cases investigated by Lockyer in the past two years.
As alleged in the complaint, Ralphs started advertising the "Great Escape" promotion in Spring 2003. As billed by Ralphs, Club Card customers would receive certificates good for a free two-night hotel stay for each $400 in qualifying purchases made at Ralphs stores between June 4, 2003, and July 15, 2003.
The advertisements failed to disclose any of the conditions and restrictions that applied to actually receiving the hotel stay. Consumers merely were advised that they could obtain details from a Ralphs store customer service desk. Only then did customers discover their ability to collect on the prize was subject to several restrictions, including: travel dates had to be processed at least 45 days in advance; consumers had to provide three alternative travel dates at least 14 days apart; reservations had to be booked by August 15, 2003; and the travel had to be completed by December 15, 2003.
Even more restrictions were contained in the "Reservation Redemption Certificates" for hotel stays received by qualifying customers. At that stage, customers were informed they had to pay taxes associated with the travel, that awards were subject to "program space availability," and that hotel stays might not be available during holidays and heavy-travel periods.
Ultimately, thousands of qualifying Ralphs customers never received the advertised travel, according to the complaint. "Hundreds of thousands of Ralphs Club Card customers who qualified for a free two-night stay through the Great Escape Promotion requested and received a (redemption) Certificate, and tens of thousands of those customers attempted to redeem their certificate ..." the complaint alleges. "Of the qualifying Club Card customers who attempted to redeem their certificates, most did not receive their award."
When customers complained they did not receive the advertised travel, Ralphs offered them a $50 or $100 coupon toward a hotel stay. According to the complaint, Ralphs said the coupons represented the store's "expression of appreciation to those customers who did not receive a hotel award." In fact, the complaint alleges, Ralphs used the coupons to "extract" from those customers a release of liability claims.
Ralphs contracted with Torrance-based Travel Services to administer the Great Escape promotion. Travel Services also does business as Planet Multimedia and Creative Services Group. Ralphs has sued Travel Services, which is not a defendant in Lockyer's lawsuit and not a party to the judgment.