Texas Nails Bait & Switch Merchants

AUSTIN (CN)-Two New York-based online electronics retailers that ran bait-and-switch schemes pushing overpriced digital camera accessories agreed to pay a combined $290,000 in civil penalties to Texas. Starlight Camera & Video and Broadway Photo must also pay restitution to their Texas customers.

The Texas attorney general sued both companies in November 2008, claiming the Brooklyn-based companies illegally hawked their stuff on the Internet.

"Customers who selected merchandise and made credit card purchases via the defendants' websites were notified that their orders had been processed," the Attorney General's Office said in a statement. "Despite the defendants' confirmation notice, customers were subsequently asked to call a specified telephone number to reconfirm their orders."

Customers who made the call "were confronted with aggressive, high-pressure sales pitches that the defendants used to promote overpriced accessories, including memory cards and batteries," the state says. The telemarketers claimed the upgrades were needed for the customers' cameras to function normally.

"When customers refused the defendants' offers, they were told their purchase was used, refurbished, or a foreign 'gray market' model that would be inoperable in the United States," the attorney general said. "The defendants' telemarketers used this tactic to encourage customers to purchase a new, higher-priced US version.

"If customers refused to upgrade their purchase, the defendants canceled the customers' orders, claiming the products were indefinitely back-ordered. When the defendants actually did ship orders, customers who intended to purchase new merchandise often received used or refurbished products."

In addition to a $255,000 civil penalty it agreed to pay the State of Texas, Starlight Camera & Video agreed to stop doing business in Texas, and to dissolve as a corporation.

Broadway Photo may continue operating in Texas "but must conduct business in a straightforward manner that does not violate Texas Law," the attorney general said.Broadway Photo agreed to pay $35,000 in civil penalties, and $65,000 in attorneys fees to the state.

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