Hobby Lobby Stores, Inc., the Oklahoma City-based arts and crafts retailer founded by  David Green, has settled an investigation by the New York State Attorney General’s office  into its allegedly deceptive advertising.

BACKGROUND

In the settlement, Hobby Lobby agreed  to change its advertising practices over  the next 60 days, contribute $138,600  in supplies to about 700 public schools  near Hobby Lobby stores in upstate  New York, and pay $85,000 in civil  penalties and other costs.

New York State Attorney General Eric  T. Schneiderman said in a statement  that, in 2013, his office began tracking  marketing materials advertising 50  percent off and 30 percent off sales.  Attorney General Schneiderman said  that his office’s investigation found that  Hobby Lobby advertised its custom  framing, furniture, and home décor  products as sale items for more than  52 consecutive weeks and that Hobby  Lobby “misled customers into thinking  they were receiving steep discounts  through deceptive advertising over a  two-year period.”

RULING

Attorney General Schneiderman said  that his office’s investigation  determined that Hobby Lobby had  violated the false advertising provisions  of New York General Business Law  Section because sales “that are  never-ending are in violation of the  false advertising law.”

“When companies mislead customers  by advertising never-ending sales, our  office will hold them accountable,”  Attorney General Schneiderman  said. “Ultimately, a permanent sale is  no sale at all.”

THE BOTTOM LINE

The Hobby Lobby action is a good reminder that, despite intense competition in the  retail category, aggressive sale and price comparison advertising can run afoul of the  law if pushed too far. Regulatory actions against these types of advertisements are  also becoming more frequent. Companies should be familiar with, and abide by, any  state and local sale and pricing regulations that exist in each state in which its retail  stores are located.