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Beneficial Credit Services Settles With Attorney General Over Vacuum Cleaner Sales

CONTACT: Elliot Burg, Assistant Attorney General, (802) 828-2153

June 11, 2008 - Vermont Attorney General William H. Sorrell announced today that his office has settled charges that RCS LLC, also known as Revolutionary Cleaning Systems (“RCS”), of East Syracuse, New York, violated the Vermont Consumer Fraud Act by engaging in unfair and deceptive practices in the door-to-door sale of high-priced vacuum cleaners throughout the state. Although RCS is now out of business, Beneficial Credit Services, Inc., a Delaware corporation with offices in Mettawa, Illinois, which financed many of the RCS transactions, will provide partial rebates and offers of full refund totaling more than $244,000 to 205 Vermonters who bought the vacuum cleaners. Beneficial will also pay the State $35,000.

The settlement is contained in an Assurance of Discontinuance filed this week with the Washington Superior Court. The Assurance states that according to RCS, that company sold Tri-Star vacuum cleaners to approximately 281 Vermonters from September 2005 to March 2006, for a total price of over $577,000, or an average of over $2050 per vacuum cleaner. Many of those sales were financed by Beneficial.

Also according to RCS, the company used a series of outbound telemarketing scripts to arrange home meetings with consumers to solicit purchases of vacuum cleaners. Three of the scripts were deceptive, in violation of the Vermont Consumer Fraud Act. One script described the call as a short “survey on household appliances”; in fact, it was not a survey but a way of gathering information to use in a later sales pitch for a vacuum cleaner, and it misidentified RCS’ business as “collect[ing] statistics for demographics.” A second script stated that RCS had “selected [the consumer’s] name to receive a free gift package” but failed to mention any sales presentation and misidentified RCS, this time as a “new advertising company.” And a third script again misrepresented the reason why RCS wanted to visit the consumer’s home, as dropping off a gift and getting the consumer’s opinion on a new product.

According to the Assurance of Discontinuance, RCS violated the Consumer Fraud Act in two other ways: by claiming falsely that consumers had been “selected” to receive a gift, when all consumers were offered the same thing; and by failing to provide all purchasers with a three-business-day right to cancel their purchase of the vacuum cleaner as required by Vermont law (60 sales were out of compliance with this requirement, in most cases because the right to cancel period was shorter than three business days).

While there is no reason to believe that Beneficial knew of or participated in the development of the RCS scripts, under Vermont law a company that finances consumer transactions is liable for violations of the Consumer Fraud Act that the seller commits in connection with transactions that the company financed.

The settlement with Beneficial provides the following:

  • Beneficial will send a letter to all Vermont consumers who did not receive a full three-day right to cancel, offering them an opportunity, within ten days of receiving the letter, to cancel their purchase from RCS and receive a full refund of what they paid to Beneficial for the vacuum cleaner. Consumers who wish to cancel must make their vacuum cleaner available to be picked up by Beneficial.

  • Beneficial will send all other Vermont purchasers from RCS with financing from Beneficial a partial rebate in the amount $750, except for consumers whose accounts were charged off by Beneficial, who are eligible to receive the lesser of $750 or the total amount they paid to Beneficial.

  • Beneficial will pay the State $35,000.

Commenting on the settlement, Attorney General Sorrell condemned the use of deceptive tactics to get a seller’s foot in the door of a consumer’s home. He also urged consumer finance companies to do due diligence before agreeing to buy installment contracts from door-to-door sellers.

For more information on the settlement, call the Attorney General’s Consumer Assistance Program at 1-800-649-2424.

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