Washington State

Office of the Attorney General

Attorney General

Bob Ferguson


September 16, 1996 - Washington and 11 other states today announced an agreement with four major retailers that will help clarify for consumers "Zero Interest/No Interest" advertisements.

"Big bold headlines of "Zero % Interest/No Interest" financing are very popular because they attract attention and bring shoppers into stores," said Washington Attorney General Christine Gregoire. "But, those ads have the capacity to deceive consumers if they fail to disclose the terms and conditions that apply."

The multi-state agreement was reached with Montgomery Ward, Tandy (which owns Radio Shack, Computer City, McDuff and Incredible Universe), CompUSA and Best Buy. All but Best Buy have retail stores in Washington.

According to Gregoire, the four retailers have agreed to set an example for other retailers by disclosing the terms consumers must meet to avoid paying financing charges. "People can be easily confused by the variety of financing programs offered," said Gregoire. "To prevent confusion, retailers must disclose the terms to qualify and tell consumers what it will cost them if they break those terms."

Consumers who miss a payment or don't fully pay off the loan within the zero interest time limit can end up paying significant interest payments and hundreds of dollars more than they expected.

The retailers have agreed that all future advertisements will prominently display the following information that applies to the "Zero Interest" financing period:

  • The full purchase price to be paid
  • The fact that payments are required
  • Number, frequency and approximate minimum payment required
  • Notice that consumers will be liable to pay all interest accrued on the purchase price during the zero interest period, from the date of purchase, if they fail to make any of the required payments on the due date or fail to pay off the entire purchase price by the end of the zero interest period
  • Limitations on the zero financing offer such as a minimum purchase requirement or whether the offer is limited to a specific brand or product

In addition, the companies have agreed to make this information available in stores. They also will disclose approved percentage rate (APR) amounts assessed on consumers who do not comply with terms of the financing program and prominently display on billing statements the amount owed, due dates and any applicable interest payments.

Gregoire urged regional and local retailers to follow the lead of the four companies by making sure their zero interest financing advertising meets the terms of this agreement.

"It's our job to protect consumers against deceptive advertising," said Gregoire. "The easiest way to do that is for retailers to voluntarily step up to making these changes in their advertisements."

As part of the agreement, the four retailers will pay $925,000 to the states for attorney fees and costs and other consumer protection expenses. Washington state will receive approximately $100,000.

Other participating states include Arkansas, California, Florida, Iowa, Massachusetts, New Jersey, New Mexico, Tennessee, Texas, Vermont and Wisconsin.