Washington State Attorney General Rob Ferguson announced on Friday, Nov. 8, 2019 that a King County Superior Court judge ruled that from 2009 to today, for-profit Value Village deceived consumers into believing the company is a nonprofit or a charity and that purchases benefited charities, when they do not.
Here’s more from the state:
The judge ruled that Value Village knew or should have known its advertising was deceptive.
King County Superior Court Judge Roger Rogoff ruled that Value Village’s advertising misled consumers into thinking that it was a charity or nonprofit. In reality, Value Village is a for-profit business that brings in $1 billion in revenue annually. Importantly, Value Village knew that its advertising had the capacity to deceive consumers based on marketing studies that it commissioned and testimony from its former chief executive officer.
Judge Rogoff also found that Value Village misled Washingtonians that their purchases benefit charities. In fact, no portion of any purchases in any store owned by Value Village’s parent company, TVI Inc., has ever benefitted charities.
Today’s ruling only addresses whether Value Village broke the law. Judge Rogoff will determine the amount of penalties Value Village will face for doing so at a separate hearing, expected sometime next spring.
“Value Village profited by misleading Washingtonians into believing that it was a nonprofit,” Ferguson said. “My office received numerous complaints from consumers who feel deceived by Value Village’s advertising.”
Judge Rogoff also found Value Village deceived consumers in the Spokane area when it advertised that donations would benefit the Rypien Foundation. The company paid Rypien a flat fee per month for the use of the foundation’s name and logo. However, Rypien was not paid for all donations.
Much of Value Village’s advertising gave Washington consumers the impression that it was a nonprofit organization. For example, advertisements in store and online claimed Washingtonians shopping or donating at the stores would “help your neighbors,” constitute “good deeds” and support Value Village’s “philanthropic efforts” in developing nations.
Value Village’s advertising claimed in-store purchases benefited its charitable partners. For example, one of the company’s in-store advertisements said, “Your donations and purchases help us fund [nonprofits’] programs and services. How’s that for shopping with a smile?” No portion of Value Village in-store sales benefited its charity partners.
Judge Rogoff read his ruling at a hearing Friday morning. The written order is expected to follow sometime next week. The state did not prevail on every claim.
Ferguson filed a lawsuit in December 2017 against Bellevue-based TVI Inc., the company that owns Value Village. The lawsuit alleged that the company has deceived thousands of Washington consumers and donors for more than a decade with an aggressive marketing campaign.
TVI is the largest for-profit thrift retailer in the world, generating more than $1 billion in annual revenue. It runs 330 stores worldwide and 20 Value Village stores in Washington state.
Prior to the lawsuit, multiple consumers shared their frustration over Value Village’s practices in complaints to the Attorney General’s Office.
A Lacey resident wrote:
“The impression any donor or customer receives is that Value Village (Savers) is a non-profit giving most of their profits to xyz charities. However, not a single store or shift manager in Thurston, Pierce, or King County (I went to many just to ask the question, as I couldn’t find any data on-line) could tell me the actual percentage of income or profit or anything about what they actually give to a charity….I have no affiliation with any of these stores except as a shopper. However, I believe when the public is given the erroneous impression that Value Village is a non-profit, the real non-profits, such as Goodwill, suffers from a decreasing amount of quality donations.”
In a separate complaint from Marysville:
“Went into [a] store yesterday 4/27/17 to obtain information about how the money is spent and where it goes. Talked to a supervisor who provided a flier with information [regarding] [an] Earth month donation drive. I felt like I was being slapped in the face because I asked for information about where the charitable money goes.”
A Seattle resident complained:
“Value Village Stores … derive profits from people believing they are giving to a deserving Charity. This especially affects older citizens who need, or are more prone to having items picked up at their home. In my case, I learned through Angel Gonzalez, Sea. Times reporter, that Value Village recently picked up my many boxes on 2 occasions and then paid the Charity far less than they will sell the items and clothing in their stores. Thinking the donation supports (in my case, Sight Connection) people often give items of high value. I did. So, I am cheated and the government is also, as the donator takes tax deductions.”
Assistant Attorneys General John Nelson, Shidon Aflatooni and Seann Colgan handled the case for Washington.
VALUE VILLAGE RELEASES STATEMENT
Late Friday afternoon, Value Village issued the following statement:
Value Village is proud of our business and we have operated with the support of our customers and non-profit partners for more than 50 years.
Today, the judge commended our business model, saying, “there is nothing wrong with TVI’s business model, in fact I would say that we should have more corporate community members who reuse unusable, unsellable items; who look for ways to properly get rid of the stuff they can’t sell; who work with charities and non-profits, who do the kind of business that they do.”
Value Village won the majority of the claims at trial. The court ruled that we have always operated in accordance with Washington state’s Charitable Solicitations Act. The judge also confirmed in today’s ruling that Value Village has always paid for all goods donated by the public to our non-profit partners, which he said “provides a steady stream of funds to support the incredible work those charities do.”
A Value Village is located at 131 SW 157th Street in Burien, and the last Value Village in Seattle will close Nov. 16.