The Washington state Supreme Court handed the thrift store chain Savers Value Village a unanimous win Thursday in a long-running legal fight with Attorney General Bob Ferguson, finding that its marketing practices constitute protected free speech.
The attorney general’s office began investigating the company eight years ago and, after Savers Value Village declined to pay millions of dollars to settle the investigation, Ferguson sued.
The state alleged that the thrift chain — which is based in Bellevue, King County, and operates 316 stores in the U.S., Canada and Australia — had created an impression that it was a nonprofit or charitable organization and that purchases at its stores directly benefited charities.
In reality, it’s a for-profit company that pays charitable organizations for donations, but it does not provide the charities a direct cut of retail sales. The justices ruled 9-0 last week that the company’s marketing practices were protected by the U.S. Constitution.
While commercial speech is given less protection than other messages under the First Amendment, Savers Value Village’s marketing was so wrapped up in promoting the charities it worked with that it was entitled to full protection, Justice Mary Yu wrote for the court.
Rich Medway, the company’s general counsel and chief compliance officer, said last week the state offered no evidence that Savers Value Village intended to deceive the public or that any consumer was harmed by its marketing practices.
Two of the major charities it works with in Washington — Northwest Center, which supports people with disabilities, and Big Brothers Big Sisters of Puget Sound — had urged the attorney general’s office to drop the case and filed a friend-of-the-court brief on the thrift chain’s behalf.
Savers Value Village paid $580 million to charitable partners globally in the last five years and kept 3.2 billion pounds of goods out of landfills, according to Medway.
“It’s hard to understand, with a business model like ours that is so positive … why the attorney general decided to pursue this for eight years,” he said. “It’s a model that should be celebrated.”
Savers Value Village did agree to register as a commercial fundraiser at the attorney general’s insistence, after previously being told by the secretary of state’s office that it did not need to. By 2015 it also posted signs in its stores disclosing its status as a for-profit commercial fundraiser and had employees make periodic in-store announcements to that effect.
In an emailed statement, Ferguson said his office was disappointed in the ruling and noted the court never disputed that the company’s marketing misled customers.
“We are proud that our investigation led Value Village to change its marketing practices and more clearly disclose that it is a for-profit company,” Ferguson said.
The lawsuit wasn’t the first time the thrift chain’s marketing practices had been challenged. In 2015, it reached a settlement with Minnesota’s attorney general in which it agreed to overhaul its donation and disclosure practices. It also paid $1.8 million to six Minnesota charities to compensate them for lost income during that case.
Fourteen states, including Minnesota, filed a friend-of-the-court brief on Washington’s behalf, arguing that authorities must be able to protect consumers from deceptive marketing practices because public trust is crucial to to the work charities do.
“The practice of for-profit companies masquerading as charities is therefore a significant threat to the public and the charitable sector,” they wrote.