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Sleepy's Gets Wake-up Call From New Jersey

December 29, 2004
Mattress retailer Sleepy's, Inc. has agreed to pay $750,000 to settle New Jersey charges that it misled consumers about its exchange policy, delivered defective merchandise and made misleading claims in its advertising.

Sleepy's
• Consumer Complaints
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• Inside the "Mattress Mafia"

The New Jersey Division of Consumer Affairs said the company will provide $90,000 to compensate unhappy consumers. The company also will pay the state $660,000 to cover attorneys fees, investigative costs and future initiatives by the Division of Consumer Affairs.

The company has also agreed to change its refund policy, provide manufacturer warranty information at each store location, and improve customer service.

"This agreement will assist affected Sleepy's customers and ensure that meaningful changes are made by the company to bring its business practices into compliance with state law," said Deputy Attorney General Lorraine K. Rak, Chief of the Consumer Fraud Prosecution Section of the Division of Law. "It's a good resolution for New Jersey consumers."

The agreement resolves a lawsuit filed by the Division of Consumer Affairs in February alleging that Sleepy's, among other things, misled consumers regarding the company's exchange policy and the right of consumers to receive a refund; delivered defective or damaged merchandise to consumers; failed to deliver merchandise as promised; and made misleading representations in advertisements. Sleepy's promptly responded to the State's lawsuit by implementing, among other things, changes to its advertising.

To resolve consumer complaints, Consumer Affairs will notify existing complainants within 40 days of the agreement that their complaints have been forwarded to Sleepy's, that they should expect a response from Sleepy's within 30 days, and that they have the right to refer their complaints to Consumer Affairs' Alternative Dispute Resolution Unit ("ADR") for binding arbitration, if Sleepy's disputes the consumer's complaints and/or requested relief.

In addition, for a one-year period, Consumer Affairs will forward to Sleepy's any complaint it receives against the company. Sleepy's must then provide a response to the complainant within 45 days of its receipt of the complaint. Consumers will have the right to refer their complaints to ADR for binding arbitration if Sleepy's disputes their complaint and/or requested relief.

Also, under the terms of the agreement, in its advertisements of merchandise, Sleepy's will, among other things:

• refrain from using any type, size, location, lighting, illustration, graphic depiction or color that causes any material fact in the advertisement to be obscured;
• refrain from using the statement that a sale contains "the lowest prices in our history," or "our lowest prices ever guaranteed" if such is not the case;
• specifically designate which merchandise is subject to special or limiting factors; and in an advertisement of merchandise at a sale price of $100.00 or more, state the former price or price range or the amount of the reduction in dollars.

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