Washington State

Office of the Attorney General

Attorney General

Bob Ferguson


OLYMPIA- - January 16, 1997 - Attorney General Christine Gregoire and 21 other states today announced an agreement with Circuit City requiring the Virginia-based company to use guidelines to protect consumers from misleading and deceptive "Zero Interest" advertisements.

"Many retailers use big bold headlines to advertise zero interest payments and don't ever list the terms and conditions that apply," said Attorney General Christine Gregoire. "That puts the consumer in an unfair and uninformed position and that's a clear violation of the Consumer Protection Act."

The guidelines agreed to by Circuit City require that all zero interest advertisements prominently list the terms and conditions that apply. Zero financing plan terms often require consumers to pay the full purchase price within the interest deferral period and charge interest accrued from the date of purchase if full payment is not received. Other zero interest deals include conditions subject to credit approval, minimum payments and purchase on a specific charge account or during a specific time period.

"People can easily be confused by the variety of financing programs offered today," said Gregoire. "To prevent confusion, we asked retailers to disclose the terms to qualify and tell consumers what it will cost them if they break those terms."

Circuit City is the fifth national retailer to agree to list all terms and conditions in their zero interest advertisements. In September, Montgomery Ward, Tandy (which owns Radio Shack, Computer City, McDuff and Incredible Universe), CompUSA and Best Buy, all agreed to set an example for other retailers by disclosing the terms customers must meet to avoid paying financing charges.

"We will also look at local and regional retailers who use zero interest advertisements," said Gregoire. "Big or small, every retailer needs to follow the same rules."

Circuit City, which has eight retail locations in Washington including stores in Silverdale, Bellevue, Everett, Bellingham, Federal Way, Olympia, Lynnwood and Tukwilla, will pay a total of $225,000 to the states who negotiated the agreement. Washington will receive $25,000 for consumer and business education, legal fees and costs.