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AG's Office Signs Agreement with Online Company Resolving Alleged Violations of Consumer Protection Laws
July 16, 2020
LANSING – The Michigan Department of Attorney General recently signed an agreement with an online business that allegedly violated the Michigan Consumer Protection Act (MCPA) by engaging in practices like price-gouging, misleading consumers about its goods and services, and failing to address legitimate requests for replacements or refunds.
The settlement is with a drop-shipping operation called Direct Home Supplies. The company has a Rochester Hills address but conducts business primarily online through Walmart and Amazon marketplaces. Attorney General Dana Nessel’s office in late May sent a cease and desist letter to Direct Home Supplies after allegations of it violating consumer protection laws surfaced.
“Consumers being duped out of their hard-earned dollars through deceptive business practices and excessive pricing is an injustice I cannot allow,” Nessel said. “My office has stood by our commitment to protect consumers from unfair treatment, and I’ll make sure companies that do business in this State respect our laws and treat their customers fairly—no matter where those customers reside.”
A complaint about the company was first made in 2017 to the Attorney General’s office. The company was contacted but did not respond to a request for more information. Since then, the Attorney General’s office has become aware of 15 complaints that have been made to the Better Business Bureau about Direct Home Supplies’ operations, which include failing to provide customers with goods, providing customers something different than what they paid for and being unresponsive to consumer requests for refunds or replacements of products.
In one more recent instance, the online seller advertised R95 face masks for $108 each, according to the consumer complaint reported to the Attorney General’s office. However, the company claims the price was for 20 masks.
Consumers who are able to provide documentation of their purchase from Direct Home Supplies for face masks at the mentioned price will be paid by the company an amount equal to three times the purchase price for each mask, under terms of the AVC.
Direct Home Supplies will pay a total of $17,400 to resolve the dispute. The company will pay $150 to each of the Better Business Bureau and Attorney General complainants, and $15,000 to the Attorney General’s office that will be used to compensate additional consumers who submit substantiated complaints. Consumers who believe they have been treated unfairly by Direct Home Supplies should file a consumer complaint with the Attorney General’s office by Aug. 31, 2020. They will then receive a claim form, through which they will be asked to provide receipts and other documentation.
Also under the agreement, in future situations where a consumer has paid for a product that was not delivered within a reasonable time or received an incorrect item, Direct Home Supplies will provide refunds or the ordered product.
The AVC also requires Direct Home Supplies to:
- Limit the number of products it sells to no more than 250,000 for two years (the company previously boasted that it offered a million products), to avoid failing to provide future customers with purchased products;
- Change verbiage on its website to clearly communicate to consumers its terms, conditions and applicable law governing its transactions;
- Establish and maintain relationships with the Better Business Bureau and the Attorney General’s office to keep apprised of and address consumer complaints;
- Monitor and maintain consumer complaints and records for two years, which must be accessible to the Attorney General’s office.
When contacted by investigators, a representative from Direct Home Supplies denied actually selling any of the masks at the noted price. However, under the Michigan Consumer Protection Act (MCPA), even simply making the offer to sell a product at excessive prices is a violation.
Face masks, along with cleaning products and other personal protective equipment, have become popular products for consumers during the COVID-19 pandemic, and the Attorney General’s office has taken multiple actions to enforce consumer protection laws throughout the public health emergency.
One of those actions was investigating Grand Rapids-based importer Kooz Concepts International Inc. The company was allegedly selling face masks that were mislabeled as having the N95 designation, which offer a specific level of protection.
Kooz Concepts also recently signed an AVC with the Attorney General’s office and agreed not to sell masks represented as N95, KN-95 or a similar designation and to establish an internal policy to ensure its goods are properly labeled.
Kooz Concept will also pay $1,750 to the State to compensate for enforcement efforts, which was how much the company profited from selling the mislabeled face masks.
To file a consumer complaint, visit the Attorney General’s Consumer Protection website.