NEWARK — The State has reached a settlement with Sleepy’s, Inc. and 1-800 Sleepy’s, Inc. ("Sleepy’s") under which Sleepy’s has agreed to comply with New Jersey consumer protection laws, make significant changes in its advertising and business practices and follow specified procedures to resolve existing and future consumer complaints, the New Jersey Division of Consumer Affairs announced today.

As part of the agreement, Sleepy’s will provide $90,000 in restitution to customers. The company also will pay the State $660,000 to cover attorneys fees, investigative costs and future initiatives by the Division of Consumer Affairs. Sleepy’s has worked cooperatively with the State and has demonstrated a willingness to institute the changes requested by Consumer Affairs in order to resolve this matter. Sleepy’s has made no admissions of any wrongdoing or liability.

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.

"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."

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.

The company has also agreed to:

• refrain from refusing to issue a refund when requested by a consumer after the company has failed to deliver merchandise, made only a partial delivery or delivered non-conforming merchandise;
  
  
• provide manufacturer warranty information at each store location; and
  
  
• implement policies and procedures to improve customer service.

This matter was handled for the State by Deputy Attorney General Cathleen O’Donnell of the Division of Law and was investigated by Investigator Allyson Garner of the Division of Consumer Affairs.

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