NEW YORK, June 12 Hobby Lobby Stores Inc has agreed to a $223,600 settlement with New York's attorney general to resolve a probe into whether the arts-and-crafts retailer used deceptive advertising to mislead consumers into believing they were getting steep discounts.
Attorney General Eric Schneiderman, who announced the settlement on Thursday, said Hobby Lobby will contribute $138,600 in gift cards for supplies to nearly 700 schools in upstate New York, and pay $85,000 in civil penalties and other costs.
Schneiderman said that over a two-year period, Hobby Lobby advertised framing, furniture and home decor products as sale items, typically marked down by 30 percent or 50 percent, for more than 52 consecutive weeks.
He said sales that are "never-ending" violate a state law against false advertising.
"Ultimately, a permanent sale is no sale at all," Schneiderman said in a statement.
Peter Dobelbower, Hobby Lobby's general counsel, said in an emailed statement: "While we strongly disagree with the Attorney General's allegations regarding our advertising practices, we are pleased that the resolution of the Attorney General's claims provides an opportunity to contribute to the needs of teachers and school children in New York."
Based in Oklahoma City, Hobby Lobby is privately held, and has roughly 567 stores nationwide.
The case is separate from a challenge by Hobby Lobby, which is run by evangelical Christians, to a provision of the 2010 Affordable Care Act that requires many companies to provide insurance coverage for contraception. The U.S. Supreme Court is expected to rule on the lawfulness of that provision this month. (Reporting by Jonathan Stempel in New York; Editing by Howard Goller and Sofina Mirza-Reid)