settles industry lawsuit

A lawsuit filed by the National Association of College Stores against online textbook giant last year has resulted in new standards for collegiate textbook advertising.

This follows the dismissal of one of two counts in the complaint filed last fall by NACS in U.S. District Court.

NACS sued in October 1999 alleging that the company "engaged in false and deceptive advertising of the discounts it offered students," NACS Public Relations Director Laura Nakoneczny said.

On Nov. 22, 1999, filed a motion to dismiss the complaint, Varsity Books spokesman Sam Heitner said. The court agreed to defer a decision on that motion while NACS and Varsity sought to negotiate a resolution.

August's out-of-court settlement -- which NACS deemed "groundbreaking" -- put into place a framework of advertising practices endorsed by both and NACS. Specifically, will refrain from advertising books in a range of discounts unless at least 10 percent of those textbooks are offered for sale at the maximum percentage discount advertised.

For example, if a category of books is advertised at "up to a 40 percent discount," at least 10 percent of the books advertised will actually be offered at a 40 percent discount.

The settlement agreement contains no admission of liability, however, on the part of parent company Varsity Group.

Follett Higher Education Group, the company which manages AU's campus store, applauded the aggressive action taken by NACS, spokesman Cliff Ewert said. He stressed the importance of fair and accurate information when purchasing any product on the Internet.

"It's been a lengthy road, but we're thrilled to have taken the lead in assuring that America's 15 million college students will return to campus this fall with accurate information on textbook pricing," NACS Board of Trustees President David Holcomb said. "We're looking forward to continuing our leadership on this issue with other textbook sellers as well."

The organization also petitioned for a permanent injunction requiring the bookseller to retract its "false and misleading advertising" by informing customers that the prior advertised discounts and use of "Suggested Price" were wrong.

Boosting consumer confidence is the bottom line for student buyers, Nakoneczny said.

Jon Kaplan, vice president for communication and strategic planning for, said last fall that the lawsuit was "completely without merit."

"Historically there was no competition in college textbook market-there was no real choice for college students," Kaplan said. "Varsity Books, through the Internet, brought choice, convenience and discounts to college students."

The bookseller, which was in the midst of its $75 million initial public stock offering during the lawsuit, must now verify that at least 10 percent of its titles are sold at the maximum savings advertised.

"While this agreement sets no binding legal precedent for college textbook advertising by retailers other than Varsity, the approval of these practices by NACS...and the adherence to them by should set an appropriate national standard for advertising price savings to college students," NACS' legal counsel Marc Fleischaker said.

VarsityBooks must also disclose clearly and prominently the basis for any "suggested" or "list" prices in its college textbook advertising.

The company boasts sales to "tens of thousands of college students at 2,600 colleges and universities across the country" but maintains that its success has been "anti-monopolistic."

"We are very pleased with the resolution of this case," Eric Kuhn, CEO and President of Varsity Group Inc said.

Nakoneczny declined to comment on additional terms of the settlement, including any monetary retribution.

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