Website Faces False Advertising Lawsuit

The head of VarsityBooks.com lashed out yesterday at college bookstores who are suing the company over claims of false and misleading advertising. Chief Executive Officer Eric J. Kuhn portrayed the suit as an attempt by profit-motivated stores to deny students "choice, convenience and discounts."

"This lawsuit is completely without merit," said Kuhn. "Old guard monopolists are threatened by the new kid on the block."

The suit, brought by the National Association of College Stores (NACS), challenges VarsityBooks.com's claim that it offers savings of up to 40 percent. The lawsuit contends that only a small percentage of its books are offered at 40 percent below what it calls the "Suggested Price."

The suit does not seek monetary damages, but seeks an injunction to force the company to change its advertisements.

NACS represents over 3,000 college bookstores, including the Harvard Coop.

The suit reflects the increasing competition between Internet book vendors and college bookstores. Over the past year new on-line retailers have emerged, offering students options beyond the traditional campus store.

By cutting out overhead costs such as inventory expenses and large staff, virtual bookstores can offer prices below retail. Yet how much of a discount on-line vendors offer is a matter of dispute.

Kuhn responded to the claims of false advertising by noting that consumers understand that savings of "up to 40 percent" does not imply that all books are discounted by that amount. He said consumers are capable of informed comparative shopping .

"College students are smart enough to look at a price at a campus bookstore and a Web site," said Kuhn.

Not everyone agrees with that line of reasoning. Marc L. Fleischaker, the lawyer for NACS, said the suit isn't about consumers' intelligence or their abilities to shop comparatively, but about misleading the public.

"Of course students are smart, as are any consumers, but that doesn't make false advertising permissible. Under that theory, you could say it's 1000 percent off," Fleischaker said.

The suit also claims that the "Suggested Price" on VarsityBooks.com's Web site is misleading because no such "Suggested Price" exists in the textbook publishing industry.

Allan E. Powell, the Harvard Coop's corporate general manager, said while other publishing industries offer a suggested price, "most textbooks don't come with a suggested retail."

While students have a variety of on-line book vendors to choose from, NACS sued VarsityBooks.com because it was the "most prominent false advertiser," according to Fleischaker.

NACS is also currently looking into VarsityBooks.com rival BIGWORDS.com, which advertises as offering up to 50 percent off.

Current laws do not set parameters for how a company can advertise its discounts. The suit against VarsityBooks.com will rely on prior case law.

"There is no federal guideline as to what 'up to' means," said Matthew Daynard, a senior attorney with the Federal Trade Commission's Division of Advertising Practices.

"It's not clear how consumers view that claim," Daynard said.

Alex J. Leary '01, who serves as a Harvard liaison for VarsityBooks.com and directed their on-campus marketing campaign during shopping period, doesn't believe anyone is misled by the advertisements.

"Any promotion is designed to first get you excited," said Leary. "Do I think they're trying to say every book is discounted 40 percent? No, I don't think so."