Brushing aside a scathing rebuff by a Harford County judge, the state attorney general's office issued an order yesterday concluding that a promotion by Luskin's Inc. offering "free airfare" to consumers who made a $200 purchase was deceptive and violated state law.
The decision by Robert N. McDonald, chief of the securities division, upholds a finding last spring by an administrative law judge. Under the order, the Columbia-based consumer electronics chain would have to set up a claims fund with an initial balance of $500,000 to compensate consumers.
Consumers who can show they were deceived by the ads could receive airline tickets or the cash equivalent. Attorney General J. Joseph Curran Jr. said yesterday that he did not know how many consumers would qualify.
The order was issued in spite of a sternly worded court decision issued in December that the ad campaign was not unfair or deceptive.
In that case, Judge Cypert O. Whitfill ruled that the attorney general's interpretation of the state's consumer laws was so broad that it would prohibit the sale of Cracker-Jack because of the prize inside the box.
The state is appealing that decision to the Maryland Court of Special Appeals, while Luskin's is appealing the administrative case to the Harford County Circuit Court.
Cary Luskin, president of the 29-store chain, denounced the attorney general's finding in spite of the judge's findings as "outrageous."
"We were already found not guilty in front of a real court," Mr. Luskin said.
In fact, Judge Whitfill's decision was not a finding of guilt or innocence but a declaratory judgment that Luskin's could run a slightly modified version of an ad the company ran in June and July of 1992, which included the free-airfare offer. The judge also found the original ad was legal.
In that ad, Luskin's offered free airfare for two to Florida to customers who bought merchandise worth at least $200, with similar offers of plane tickets to the Bahamas with a $300 purchase or to Hawaii with a $400 purchase.
The attorney general's office contended that to redeem the air travel certificates, customers had to make hotel arrangements through the Florida-based Vacation Ventures Inc., at costs of $470 to $1,875.
Soon after the original ad offering "free airfare" ran, the state Consumer Protection Division received a complaint about it from another business, division chief William Leibovici said. There were no complaints from consumers until after the case was publicized, Mr. Leibovici said.
Based on the single complaint, state consumer protection officials contacted Luskin's and told the company to stop running the ads.
Luskin's did so, but came back to the attorney general's office with a proposal to run a new version of the ad omitting the word "free."
The attorney general's office told Luskin's that the new ad was still illegal, so the company filed suit in Harford County Circuit Court Sept. 11, challenging that opinion. Seventeen days later, the state brought an administrative case against Luskin's on the basis of the original ads.