Jerry Brown (D)
LOS ANGELES (Legal Newsline)-A Wisconsin-based company will for the second time pay the state of California for its sales tactics, which Attorney General Jerry Brown said constitute consumer fraud.
The attorney general's office announced Wednesday that Hy Cite Corporation, a company that sells cookware door-to-door, agreed to pay $1 million in restitution to its California customers, plus penalties and costs to the attorney general and the Los Angeles Department of Consumer Affairs, who worked with Brown on the investigation.
Brown said Hy Cite used discriminatory business practices and false advertising to sell its Royal Prestige cookware.
"Hy Cite's sales approach has been to scare people into buying high-priced pots and pans by telling customers that the cookware in their own home was unsafe," Brown said. "We won't tolerate this type of predatory consumer marketing in California. This settlement will put an end to Hy Cite's bogus chemical tests and predatory lending terms and ensure that the company treats its customers fairly and honestly."
The company targeted Latino customers, according to the attorney general's office, through deceptive sales techniques. Salespeople are reported to have told customers they had won a prize, or asked them to participate in opinion polls.
"Once in consumers' homes," the attorney general's office press release stated, "the salespeople often used high-pressure sales tactics and deception to convince consumers to buy the expensive cookware. Salespeople scared consumers into believing that cookware made of non-stick materials or aluminum would make them sick, claiming that Royal Prestige's stainless steel cookware was safer to use."
Salespeople would also conduct bogus experiments that would make consumers believe their pots and pans were unsafe.
Many customers were convinced to finance the product through a company financing plan that ended up charging 20 percent interest. The company also had two separate credit structures, one for "Anglo" customers that included post-dated checks and a 90-day payment deferral plan, neither of which was offered to Latino customers.
Hy Cite previously settled a lawsuit with the attorney general's office in 2000.
At that time, the company agreed to reform its business practices, pay restitution and civil penalties and honor a permanent injunction against using such practices. This time around, the settlement includes an agreement that Hy Cite will hire an independent monitor for three years to conduct in-depth interviews with future customers.