The Value Village chain, in the knowledge of misleading customers by misleading itself to the public as a charity, ruled a King County Superior Court judge Friday.
In reality, the Bellevue-based company, also known as Savers, is the largest promotional retailer in the world.
However, Value Village defeated some of the claims made against Washington by Attorney General Bob Ferguson in a 2017 consumer protection suit.
King County Superior Judge Roger Rogoff will decide the penalty against Value Village during a hearing next spring. The suit applied for damages of up to $ 2,000 per violation. Previously, AG's office had offered to settle for $ 3.2 million.
Rogoff gave his ruling orally. A Value Village spokeswoman said the company would wait until it releases its written ruling next week before deciding to appeal.
"Value Village is proud of our business, and we have operated with the support of our clients and nonprofit organizations for more than 50 years," Value Village attorney general Rich Medway said in a statement.
In part, the case was a dispute over how Value Village presented its business model to buyers. The company generally pays nonprofits and charities a negotiated price for gifts received from the public. It uses the names and logos of the charities to help solicit donations.
One thing Value Village does not do is donate to charities a portion of the purchase price when customers purchase items.
Rogoff decided that the chain's marketing misleads customers into thinking it does ̵
He also stated that Value Village mislead customers into believing that their donations would support the Spokane-based Rypien Foundation. In that case, however, Value Village paid Rypien a flat fee of $ 4,000 per month.
Rogoff upheld the state's broadest claim that Value Village mislead customers into believing that the commercial company itself was a charity.
A survey conducted by the AG's office found that 75% of Washingtonians mistakenly believed that Value Village was a nonprofit. And, Rogoff agreed, Value Village's own marketing studies showed that the company knew its advertising could trick consumers.
"Value Village served to mislead Washingtonians into believing it was a nonprofit," Ferguson said in a statement. "My office received many complaints from consumers who feel deceived by Value Villages advertising."
However, Value Village prevailed at some point in the lawsuit.
For one, the judge did not purchase the state's claim that by giving donors receipts to claim their gifts as a tax deduction, Value Village mislead consumers into believing that the nonprofit organization on the receipt receives full value of its donations.
In fact, Value Village nonprofits pay a small fraction of the value of a donated item, often sharing the value of donations between several nonprofit organizations – not just the one on the receipt.
Rogoff also rejected the state's claim that the company failed to provide necessary information in its stores after registering as a commercial fundraiser.  And the judge rejected the state's claim that Value Village breached the terms of the contract with Eluna, formerly the Moyer Foundation, by continuing to use the charity's name and logo to solicit donations after the contract expired. The first complaint claimed that three Value Village locations claimed through 2015 that donations benefited Eluna, and served children and families affected by grief and addiction, even though the company's contract with nonprofits was terminated in 2006.
Rogoff said he believed The Value Villages basic business model was sound, and praised the fundraising company on behalf of charities, according to a spokesman for Value Village.
AG's 2017 suit came on the heels of a similar 2015 complaint filed in Minnesota. Value Village settled that case for $ 1.8 million.
In April 2018, a federal judge dismissed a lawsuit filed by Value Village alleging Washington AG's investigation was an attempt to dictate the terms of the company's nonprofit contracts.
Savers parent company, which Ferguson claims has an annual income of $ 1 billion, was founded by Bill Ellison in 1954 as a thrift store in San Francisco's Mission District, and has been owned by a number of private equity companies in recent years.
It operates 330 stores worldwide and 20 Value Village stores in the state of Washington – but after November 16, when the Crown Hill site closes, no one is in Seattle.