California Attorney General Edmund G. Brown Jr. and the Los Angeles County Department of Consumer Affairs announced today that $100,000 in consumer refunds are still available as part of a settlement reached last year with Hy Cite Corp. after the company "hoodwinked" consumers into buying its high-priced cookware using deceptive in-home demonstrations and scare tactics.
Brown urges consumers who were scammed by Hy Cite to contact the Los Angeles County Department of Consumers Affairs at 1-800-593-8222 to claim their refund.
"Hy Cite hoodwinked hundreds of consumers into purchasing high-priced pots and pans by using deceptive in-home demonstrations and scare tactics," Brown said. "We want people to know that if they were scammed by HyCite, there's refund money available for them. While $250,000 has already been paid to victims as part of our settlement, $100,000 in refunds remains unclaimed."
In September 2008, Brown's office secured a $1 million settlement with Hy Cite, requiring the company to pay $350,000 in restitution to consumer victims. As part of the settlement, the Los Angeles County Department of Consumer Affairs agreed to distribute the restitution funds, $100,000 of which remains unclaimed.
Prior to the settlement, Brown's office investigated Hy Cite and found that the company violated the state's unfair competition and false advertising laws, as well as a previous injunction prohibiting such practices.
Hy Cite's victims were mostly Spanish-speaking consumers living in predominantly Latino neighborhoods in Southern California. To get into homes, salespeople told consumers that they had won a prize or asked them to participate in opinion polls. Once inside, salespeople often used high-pressure, deceptive tactics, including in-home demonstrations of their products.
'Tests' of cookware
For example, salespeople regularly performed bogus "tests" on the victim's cookware, claiming that non-stick or aluminum cookware was unsafe for families and could lead to illness.
One test involved heating a mixture of baking soda and water in consumers' pans to produce a bad-tasting paste. The salespeople claimed their tests showed that toxic chemicals were transferred into the family's food through their existing cookware. Hy Cite's "Royal Prestige" cookware ranged in price from $2,000 to $4,500 per set.
Costs further escalated when consumers agreed to pay for the pots and pans through the Hy Cite's financing plan. Under these terms, while the company promised low rates, consumers were instead stuck with interest rates of 24% or higher, leading to missed payments, damaged credit scores and collection calls.
Brown's office also found that the company used two separate credit structures for customers based on ethnicity: one for "Anglo" customers, who were offered 90-day payment deferral, contract cancellation, and the use of post-dated checks; and one for Latino customers, which included none of these options.
In addition to the restitution and penalties, last year's settlement required Hy Cite to pay for an independent monitor to conduct in-depth interviews with future consumers of Hy Cite products. The settlement also set forth strict requirements on what salespeople say before and during sales presentations.