Independent merchants in the hobby, craft, and framing industries have long spoken about misleading practices by Michaels stores—most specifically, advertising deep discounts while actually charging full price.
Well, as the saying goes, the chickens have come home to roost.
From the New York State Attorney General website:
ROCHESTER – As students and teachers returned to school this month, Attorney General Eric T. Schneiderman today announced that retail chain Michaels Stores, Inc. has agreed to enter a $1.8 million settlement for engaging in deceptive advertising practices by misleading consumers into thinking they were receiving steep discounts over a two year period. As part of the settlement, the company will change its advertising practices and contribute $1 million in art and craft supplies to public schools throughout New York State, in addition to $800,000 in civil penalties.
“For years, Michaels duped consumers into thinking they were receiving huge discounts, when in fact, they were simply paying the regular store price,” said Attorney General Schneiderman. “Through deceptive advertising practices, this company violated the law and took advantage of hardworking consumers trying to save money. In addition to the civil penalties, the company is paying for their actions by providing $1 million in school supplies for hundreds of school districts statewide.”
Michaels Stores, Inc. describes itself as a specialty retailer of arts, crafts, scrapbooking and custom framing. Its 48 stores throughout New York State are frequented by parents, students and teachers to purchase school supplies.
As a result of the Attorney General’s settlement, Michaels will be required to give back to the public schools in communities which their stores are located. Today’s action will benefit as many as 724 school districts throughout the state. The schools are set to receive $1 million in gift cards to purchase supplies.
The investigation began in 2009 when the Attorney General’s office began tracking the 50 percent off marketing materials where Michaels advertised its “Custom Framing” as a sale product for at least 104 consecutive weeks. The law prohibits sales that are never ending. Investigators throughout the state collected newspaper flyers, online flyers, in-store banners and signs advertising the custom framing. Michaels advertised in at least one of these forms every day for two years. The ads stated that custom framing was either at least 50 percent off or a certain dollar amount off.
Michaels has agreed to settle the investigation by paying civil penalties of $800,000 in addition to the $1 million to New York’s public schools for violating General Business Law (350-D) for False Advertising.
The case was handled by Assistant Attorney General Benjamin Bruce under the direction of Assistant Attorney General In-Charge of the Rochester office, Debra Martin and Executive Deputy Attorney General for Regional Affairs, Martin J. Mack.
The success of the AG’s office has me wondering—will other states follow suit (no pun intended), now that New York has recovered funds for the misleading practice? Given how many are hungry for revenue from any source possible, it wouldn’t surprise me one bit to hear of new lawsuits popping up, fast.
Equally interesting will be consumer reactions. Even the most loyal customer base doesn’t like to find out they’ve been misled, and in some people’s perception, gouged. Times are tight; finding out a store they liked was inflating “regular” prices in order to falsify “sales” won’t sit well.
Nor should it.
Thanks to Kara Klumshuk for the heads up.
Click here to tell me what you think....
I always knew the whole 50% off custom framing was bogus. No real sale is an every week deal.
I’m not sure who is “duped” – customers of Michael’s are fully aware that framing is always on sale, for example. So nothing is changed for me except wondering, for that entire year that investigators were collecting “evidence”, why one of them didn’t walk over to the closest counter and just say, “excuse me, who can I talk to and let know that your advertising practice is actually breaking the law, here’s some information about it so you can correct this discrepancy.” This is like the neighbor who calls out a city official instead of walking next door to say “howdy! how about a cup of coffee while we chat about things that matter to both of us, one of which is your barking dog/dumped over garbage/overgrown weeds!” Problems are REALLY solved face-to-face, not lawsuit-to-lawsuit.
Still, I’m happy for the classrooms that will benefit from their “gift”.
Don’t know if it’ll actually change peoples’ attitudes. As a small merchant, I was competing against a huge corporation who marked up their merchandise, then sent out coupons. Even with the coupons independent stores were often cheaper, but the public had the perception that they were saving money buying with the glitzy catalog and coupons. This corporation also uses a fake cute elderly couple for advertising that consumers are convinced is real, and get upset if anyone says otherwise.
Framers have been fight this one for years. M’s has always run this deceptive advertising, offering 50% -70% off of custom framing while simply inflating the retail price and always offering it on sale. The impression was that an independent framer had to be more expensive if they couldn’t meet the phoney discount. Shop your Local Independent Framing Expert for fair everday prices.
What took the Attorney Generals office so long?! Michales has been blatently leading consumers on for a lot more than two years with this scam. They got off easy. I realized it years ago and refused to have ANY of my framing or art related needs handled by them. The locally owned frame shop and gallery gets all my business and I couldn’t be happier with them! They don’t resort to this kind of manipulation of their customwrs. They VALUE their customers and take care of them every day of the year without resorting to gimmicks AND with better quality workmanship AND lower prices!!
I am a self-employed artist who used to make a living painting pictures and getting customers at White Marsh Mall’s Deck The Walls frame shop. Then Michael’s opened up nearby with their 50% off frames, all the time, and we figured out finally they were actually about the same price as ours. An employee went there and got an estimate on a frame job and came back and compared. But customers stopped coming to our store, saying they “got half price at Michael’s”. Deck The Walls went out of business soon after, and I have been living in poverty ever since, just hoping I can make rent this month. Those %#$@&!!!! Michael’s ought to be put out of business. They put me out of business with unscrupulous business practices. The authorities should shut them down. I remember going to Michael’s myself to find out what their regular price was. They didn’t know, “we always have this sale” they said. I asked for the cheapest ready made frame to compare prices. The sales lady looked up a price. I looked right behind her on the wall and saw one hanging there that was cheaper. She lied and it was so obvious I just couldn’t believe it. Neither did anyone else. Hitler said in “Mein Kampf” that you can be caught if you lie, but if you tell a big enough lie, everyone will believe it.
Interesting that Michaels was a family run business, started years years ago by a man named Michael Dupe. Funny name, huh? They had a family feud and split the company in two: Michael’s went to the son and MJDesigns stayed with Michael Dupe. I worked in the corporate HQ of MJDesigns. It was a great family company to work for with great benefits. But Michaels put them out of business too. My friend who worked across town at Michael’s corporate HQ for several years, did not have many nice things to say about them.
There is custom framing and then there is Professional Custom Framing that I do that you simply can not discount every order. Only on multiple items (10 or more) can you possibly give a discount based on what the distributors rep can work out with you.
Michael’s is indeed a “burr under the saddle” of every true professional custom picture framer I have ever spoken to. Too bad that someone doesn’t start a fund nationwide to devise an ad campaign by independent framers to educate the public on the sham and scam that Michaels has been feeding them for far too long…anyone want to step to the plate??
Ethics are becoming akin to the new speak “I am entitled to my to my entitlements”. Michaels is not doing something new. Their ethics are questionable; however, if the people questioning have no real power to have Michaels change, then perhaps, just like the result in the Rochester court case, they too are not helping to change this companies habits – only succeeding in getting Michaels to pass some of their revenues to another pocket. In my city they continue with the same style advertising. It comes to the consumer – how ignorant do they wish to be? The answer is found in the truth. Their continuing loyalty to the framing dept. at Micheals.
I work at a Michaels store, and while Corporate sometimes feels like the enemy, I couldn’t ask for a better group of coworkers. We are all facing the effects of the recession, in the form of cut hours and job positions, but as a full-timer at last, I am so grateful to my store for the opportunities it has given me. The custom frame shop is a different world from the one I operate in most of the time, but our framers are just hardworking students (and one parent of five) trying to keep roofs over their heads and food on the table. It’s not their fault that the advertising department has deceptive practices. They are there to offer customers the best value they are allowed to offer, and to try to up-sell if they can. So please direct your anger where it is due: with clowns in positions of power, making decisions that reflect poorly on the rest of the company.
I operate a tiny custom frame shop close to a huge Michael’s store.
I cannot tell you how many people come in unhappy with them over
how their work was handled and how much they were charged. I
try not to ask “just how stupid are you to think a 50% off sale each
week can be real”. Then I solve the problem at a reasonable price, delivered on time as promised and PERFECT, And guaranteed. I’ve never lost a one back to Michael’s!
I think someone should investigate Kohls too.
What a scam. I paid $180 for simplest frame 16.5x 10.5 double matted. Thought it was expensive based on my experience with professional galleries but was new in town I relocated to. When I left the store I saw their sign of 55 percent off sale and went in to ask for the discount. Manager said I already did get a discount of $207. I. E the Real price was $380 which for this size frame is ridiculous. Michael’s business practice in Florida are dishonest. Stay away! You’ll get better deal anywhere else.
This is criminal, their plan is to wipe out small business which is the back bone of any employment structure…..it destroys small business thus destroying jobs!
They should be made to pay all those people they put out of business.
Custom Framing at Michaels is totally awesome! I get to deceive people on the sale and upon delivery I get to say, “Sorry no refunds but we will do what we can to correct the matter.” Then a week passes and the customer calls back to see if their frame is ready. We respond, “Yes, I’m sorry you didn’t get a phone call we have some new people (even though all framers are on their 3rd or 4th year).” I’m glad Drymounting is no longer an option because we are still getting upset people to this day that we are responsible for correcting the creases or newspaper black ink that got transferred onto their signed art. Printguard was a joke when I tried it for the first time. “YES, those bubbles will smooth out on their own with time. I’m pretty sure I told you that once it goes on it can NEVER be removed.” Hey if you haven’t heard it already, ask around because I found out that in 2014 all Framing Associates will be getting commission. I’m thinking about quitting since Michaels cheats the customers, more than likely we’ll be getting reduced pay and told that our commission will help make the difference and if you are really good, you can be making a thousand a week…. hmmm, I think the last call center I worked at said the same thing.
Hola! I’ve been following your web site for some
time now and finally got the bravery to go ahead and give you a shout out from New Caney
Texas! Just wanted to mention keep up the great work!