By Sherry Koonce

The News staff writer

Beaumont-based Conn’s, Inc., will pay $4.5 million in restitution and reform its business practices as part of an agreement reached with the Texas Attorney General’s office Tuesday.

Conn’s officials say though they resolved the issue with the state, the company is not guilty of the allegations, and the suit does not have merit.

“Today we resolved the suit filed against us last May by Attorney General Abbott. The suit alleged Conn’s engaged in deceptive trade practices. Conn’s denied those allegations in our answer to the suit and we continue to deny them today. The terms of the settlement provide that Conn’s denies any wrong doing,” William Nylin, Conn’s chairman, said.

In May, the state AG filed an enforcement action against Conn’s charging the company with violating the Texas Deceptive Trade Practices Act. The company was accused to failing to honor product warranties, misleading customers about the nature of its products, false advertising and other violations of the trade act.

In a press release issued Tuesday by State Attorney General Greg Abbott’s office, more than 3,500 customer complaints were lodged against the appliance and electronic retailer.

According to the complaints, the company relied on aggressive and deceptive sales tactics to increase its extended service warranty sales for appliances, electronics and other products.

In addition to the $4.5 million set aside for restitution to affected customers, the company is required to make changes in the manner it conducts business.

“Just in time for the holiday shopping season, today’s agreement fundamentally reforms how Conn’s does business, Abbott said.

Under its agreement with the state, Conn’s must remedy its high pressure sales tactics, refrain from misleading customers about extended warranties, and fully honor the warranty agreements sold to customers.

Conn’s was charged with not providing customers with a copy of warranty agreements at the time of sale. As a result, customers did not know about exclusions, limitations, cancellation penalties and other provisions governing the warranties.

Tuesday’s agreement instructs Conn’s to provide a copy of the extended warranty agreement to customers at the time of sale. The company must also ensure that sales personnel accurately represent rights, remedies or obligations detailed in the extended warranty agreements.

Conn’s must also refrain from adding extended warranty or credit insurance products to customers’ invoices without their written consent. The agreement applies to both existing and future extended warranties.

The company, according to customer complaints obtained by the AG’s office, delayed repair appointments for weeks or even months, failed to repair items to working condition, ignored calls, and refused to give refunds or replace defective products.

Tuesday’s agreement requires Conn’s to replace the product with an identical or similar model if it fails within the initial 72 hours of purchase or delivery to a customer’s home.

If the product fails at the time of delivery, the Conn’s delivery team must remove the product and exchange it.

The agreement also requires Conn’s to establish a $4.5 million customer restitution fund to benefit customers harmed by the unlawful content.

Conn’s must also pay $250,000 in attorney fees and $100,000 to the University of Houston Consumer Law Clinic.

In a press release issued by Conn’s company president, Tim Frank, said though the suit should never have been brought, it was in the best interest of company employees and their families to put the matter to rest.

“Having entered the busy holiday shopping season, which arrived during a difficult time for our nation’s economy, resolving this suit now allows us to focus on providing quality merchandise to our customers at prices and on terms that help make their dreams become reality. As we have for nearly 120 years, Conn’s will continue to put our customers first.”

The AG’s office in coming weeks will review customer complaints and other data to determine how best to administer the restitution fund.

Customers with questions should call (800)252-8011 or visit the AG’s Web site at www.texasattorneygeneral.gov.

skoonce@panews.com