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Best Buy, Toys R Us Say Wal-Mart Price Ads Deceived

(Corrects attribution of Best Buy spokeswoman in third paragraph of story published Jan. 5.)

Best Buy Co. (BBY) and Toys R Us Inc. (TOYS) have filed complaints in several states alleging that Wal-Mart Stores Inc. (WMT) deceived consumers in price comparison advertisements.

The ads aired from late November to mid-December, according to Toys R Us. Sales in November and December account for 20 percent to 40 percent of U.S. retailers’ annual revenue, according to the National Retail Federation, a Washington-based trade group.

Best Buy lost “tens of thousands of dollars” because of the ads, according to spokeswoman Amy von Walter, who said in a telephone interview that the company has complained to attorneys general in Florida, Illinois, Michigan and New Jersey.

Toys R Us has provided multiple state attorneys general with evidence of what it called “deceptive advertising practices that mislead consumers regarding specific product pricing comparisons,” said Kathleen Waugh, vice president of corporate communications for Toys R Us. The complaints were reported yesterday by the Wall Street Journal.

Wal-Mart, the world’s largest retailer, followed “all local, state and federal rules and regulations,” Wal-Mart spokesman Steven Restivo said in a statement. “We know competitors don’t like it when we tell customers to compare prices and see for themselves but we think consumers deserve every chance to find value.”

FTC Website

He pointed to a statement posted on the Federal Trade Commission’s website: “Comparative advertising, when truthful and non-deceptive, is a source of important information to consumers and assists them in making rational purchase decisions.”

Restivo said the ads “are supported by a rigorous internal process to help ensure accuracy, which includes legal review and oversight as well as documentation supporting our statements about quantities and pricing.”

Waugh, the Toys R Us spokeswoman, said that Wal-Mart misled customers about pricing on several toys including the Fisher- Price Surprise Kitchen and Table Set, which was advertised for $39.97. Third-party shoppers found the sets were being sold for as much as twice that price, according to Toys R Us. Wal-Mart said the in-store and advertised price for the set was correct at $39.97.

Wal-Mart was selling Holiday Barbie dolls for $7 more than their advertised price, according to Toys R Us. The ads misstated the Toys R Us prices for both toys, Waugh said. Fisher-Price products and Barbie dolls are both made by Mattel Inc. (MAT), based in El Segundo, California.

Fijit Doll

Toys R Us also complained that Wal-Mart promoted an interactive doll called a Fijit, also made by Mattel, which was out of stock. An ad featuring the product that aired in December forced other toy sellers to drop their prices.

“The toy was not available on Wal-Mart’s website and was out-of-stock in many of the stores our teams checked,” Waugh said in an e-mail. “Still, the Wal-Mart ads kept running heavily all week even though the price comparison was not correct when these ads were run.”

New Jersey attorney general Jeffrey Chiesa’s office is reviewing the complaints, submitted in December, Jeff Lamm, a spokesman for the state division of consumer affairs, said in an interview.

“We will determine what the next step if any should be,” he said.

Florida Attorney General Pam Bondi also is reviewing the complaints, spokeswoman Jenn Meale said. Joy Yearout, a spokeswoman for Michigan Attorney General Bill Schutte, declined to comment on what happens next.

To contact the reporter on this story: Renee Dudley in New York at rdudley6@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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