A.G. Schneiderman Announces Agreement with Lowe’s Home Centers Over Deceptive Sales Practices Used for Flooring Installations
Lowe’s Will Refund Over $1 Million To More Than 16,000 New York Consumers and Will Establish New Guidelines For Installation Services
NEW YORK – November 9, 2015 – (RealEstateRama) — Attorney General Eric T. Schneiderman today announced a settlement with Lowe’s Home Center, LLC, which has 64 retail locations in New York State, over allegations of deceptive sales practices for flooring installations. The agreement provides cash refunds of up to 10% of per-square-foot basic flooring installation fees charged to over 16,000 New York consumers and establishes new disclosure guidelines relating to “per square foot” installation charges. The agreement will return up to $1,100,000 in cash refunds to consumers and concludes an investigation into Lowe’s per square foot billing practices for alleged deceptive acts and practices and deceptive advertising relating to per square foot installation charges. Under an Assurance of Discontinuance signed by the company, they will also pay $900,000 in costs and fees to New York State.
“When consumers shop for home installation services, they deserve to be dealt with honestly and fairly – and not to be misled by deceptive sales practices that conceal the true cost of a service,” said Attorney General Schneiderman. “Today’s agreement with Lowe’s will return over $1 million to consumers and will result in clear disclosures being made to customers. We expect others who advertise for flooring installation to follow the model practices outlined in today’s agreement.”
Under the Agreement’s new disclosure guidelines, prior to any consumer becoming bound to an installation contract, Lowe’s shall fully disclose how its “per square foot” installation charges are calculated, including but not limited to, identifying the actual square footage of the project, the actual square footage of the materials required, and the square footage upon which the installation charges will be based. Lowes’s will also plainly disclose any charges in excess of the actual square footage of the project when per unit pricing is quoted for installation projects.
The terms of the agreement require Lowe’s to also refund up to 10% of per-square-foot basic installation fees charged to customers in New York who purchased basic installation services for covered categories between January 1, 2009 and December 31, 2012. These customers will receive notice by mail advising them of their right to a cash refund. Consumers will verify their identity and that they have not received a prior refund and will then receive a check valued at 10% of the total installation cost.
An investigation by the Attorney General’s Office revealed that since at least 2008, Lowe’s advertised installation services to consumers for several of its product lines including carpeting, ceramic tile, wood/laminate flooring (the “Covered Categories”) offering, at times, these products for installation based on a “per square foot” basis. For example, flooring has been advertised at “$1.99/sf installed” although it was not disclosed that this was based on the square footage of materials ordered, not the square footage of the project area.
To utilize Lowe’s installation services, consumers paid Lowe’s to send a third-party installer selected by Lowe’s to measure the project and obtain measurements. Consumers who proceeded with the purchase of materials and installation received a credit of the measuring fee toward the total project cost. After the customer selected the Lowe’s product to be installed, Lowe’s generated a document setting forth the cost of the material required for the job and the cost of installation. Although the installation fee was by the “square foot,” the square footage of the room(s) size was not disclosed to the consumer on the paperwork given to the consumer, nor was the square footage of the material ordered. The installation charge was calculated roughly upon the amount of material ordered, not the size of the project. This was not disclosed to the consumer.
The Attorney General alleges that in contrast to the explanations proffered to customers for the need to purchase material in excess of the actual square footage of the project area (and their ability to return unopened excess product for a refund), Lowe’s did not systematically explain to customers that per-square-foot installation fees also applied to the material in excess of the actual square footage of the project area. Rather, Lowe’s typically only provided the consumer with a lump-sum installation charge. Consumers were not regularly provided square foot measurements by Lowe’s unless the measurements were specifically requested. Lowe’s and its contractors received higher remuneration from consumers by calculating the installation charge based on the total amount of product ordered, rather than the actual square footage of the project area.
The office is continuing to investigate other home center stores that fail to properly disclose the true cost of home improvement installation services. Consumers deserve transparency in installation pricing and the Attorney General will demand industry practices which do not create a bait and switch environment.
This case was handled by Deanna Nelson, Assistant Attorney General In-Charge of the Watertown Regional Office. The Watertown Regional Office is part of the Division of Regional Affairs led by Executive Deputy Attorney General for Regional Affairs Marty Mack.
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