A New York furniture company has been ripping off consumers of funds totaling hundreds of thousands of dollars, according to a lawsuit filed by Attorney General Eric Schneiderman.
Our New York consumer law attorneys understand that the biggest problems occurred as FWS Home Furnishings was spiraling deeper into debt, closing in October without warning. Ultimately, this left many customers who had made advance or down payments with no furniture – and no refunds.
Stock has been sold during a foreclosure auction, and a developer is planning to snatch up the store property on Elmwood Avenue.
Schneiderman’s Buffalo branch investigation revealed that the total consumer losses is likely somewhere in the range of $250,000. While this might not seem like a great deal of money in the grand scheme of business deals, particularly when spread out among many victims, the fact is that people save up for years to make these type of big-ticket purchases. To be completely left out in the cold – with little recourse to recover their money – is unconscionable and, based on the facts so far provided, illegal.
New York Code, Article 22-A, Section 349, covers deceptive acts and practices. This statute holds that deceptive acts or practices in the conduct of any business, commerce or trade or in the providing of any service are unlawful. Deceptive practices are generally held to be any business practice that involves fraud or misrepresentation or unconscionable or oppressive acts. If the court finds that the defendant willfully violated this law, it may increase the award damages to an amount that equals three times the actual damages, plus attorney’s fees. Additional awards may be given if the victim is elderly.
Although the furniture store had been in business for more than 30 years, the most recent two owners purchased it in the spring of 2010. Under new ownership, the business began hemorrhaging funds. Just this year alone, the company is believed to have lost more than $400,000. This prompted creditors to effectively shut it down.
The Attorney General’s investigators later learned that whenever the company made an order on behalf of a customer, the company required customers to make advance payments. However, the company didn’t separate those funds into a different account. Instead, it spent the money before merchandise was even delivered. Had the company continued to stay open and thrive, this may not have been a major issue. But when FWS did close, it’s estimated there were about 700 open orders in which consumers had made some sort of payment, but hadn’t received the merchandise. In all, this amounted to roughly $420,000.
Since then, some of those customers have been able to either stop payment they had made with credit cards or were able to actually get the furniture for which they had paid.
Ultimately, the Attorney General’s office is hoping to get the two former owners to repay the money they owe to the remaining customers, and to bar the owners from opening another business in the state unless they post a $500,000 performance bond. Additionally, Schneiderman’s office is requesting a temporary restraining order that would prohibit the company and owners from destroying any business records or transferring any funds.
The Law Offices of Ira S. Newman provides consumer law representation in New York City, Long Island, Great Neck and throughout the area. Call 516-487-7375 or send us an e-mail.
Schneiderman Sues FWS Furniture After Numerous Consumer Complaints, Dec. 12, 2012, By Ted Muel, CNY News
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