Toys “R” Us recently settled a lawsuit alleging it offered consumers free gifts with purchase, but failed to honor the offer by providing gifts of lesser value or no gift at all to a majority of customers. In the complaint, the plaintiffs allege that the company promised consumers free gifts of a certain value for certain purchases, but failed to disclose that the higher value gifts were only available in limited supply. As a result, many consumers received gifts of considerably less value or no gift at all. In the complaint, one plaintiff alleges he purchased two Lego sets after seeing an incentive for a Lego gift worth $15 dollars. Instead of receiving two gifts worth $15, he received a magnet and Christmas tree figurine valued at $5 each. The complaint alleged Toys “R” Us violated New Jersey’s Consumer Fraud Act and Connecticut’s Unfair Trade Practices Act, and also included claims alleging breach of contract and breach of the implied covenant of good faith and fair dealing.

TIP: Companies offering “gift with purchase” or similar incentives should be sure to include “while supplies last” messaging prominently in connection with the offer. However, it is important to remember that the “while supplies last” language allows the company to substitute something of comparable or greater value (but not of lesser value), but generally does not relieve the company of the obligation to award a free item of comparable or greater value even if supplies of the advertised free item are exhausted.