A Washington state appeals court has overturned a 2019 ruling that found Bellevue-headquartered thrift chain TVI Inc., which operates Value Village and Savers, had misled customers by deceptively marketing itself as a charity.

Washington Attorney General Bob Ferguson, whose office sued TVI in 2017 over alleged violations of the state’s Consumer Protection Act, will appeal the decision, spokesperson Brionna Aho said in an email.

“We … respectfully disagree with the appeals court,” Aho said. “We intend to hold Value Village accountable for misleading Washingtonians.”

Value Village cheered the reversal, in a statement calling Ferguson’s suit “costly” and “misguided.”

The appeals court’s ruling “was a resounding confirmation that what we’ve been doing has always been transparent and the AG’s case was not well-founded,” said Value Village general counsel Rich Medway. The company has disputed the contention by Ferguson’s office that it ever misled consumers, noting that the AG “admitted it had no evidence TVI ever intended to deceive anyone, produced no consumers to testify at trial and identified no actual harm to any consumer or donor,” said Value Village spokesperson Sara Gaugl in an email.

Value Village operates 14 locations in Washington, though none in Seattle; its last Seattle storefront, in the Crown Hill neighborhood, closed in 2019.

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In his 2017 suit, Ferguson blamed the thrift chain’s marketing for a widely held misconception that Value Village is a nonprofit. The state argued that Value Village’s characterization of its relationship to charity partners, including Big Brothers Big Sisters of Puget Sound, Northwest Center and the Arc of Washington State, deceived shoppers.

Value Village interacts with charities in two ways: It pays them a monthly fee in exchange for using their names and logos to solicit donations of used clothing, furniture and other merchandise from community members. Payments to charities are based on the volume of donations received. Value Village also purchases items that people have donated to charities, then sells those items to consumers at a higher cost.

Value Village doesn’t donate directly to charities, and its charity partners don’t receive any of its sales revenue.

The state argued that Value Village’s promotional material, though, could leave shoppers with the mistaken impression that a portion of sales at the thrift chain was flowing to charities. On in-store signs and banners, for instance, Value Village tells shoppers that “these racks support more than just clothes. By shopping and donating at this store, you support [charity logos].”

A King County Superior Court judge sided with the state in 2019, noting that Value Village “knew or should have known” that its marketing could deceive consumers.

Monday’s appeals court decision reversed that earlier ruling, finding that it “unconstitutionally chills protected speech — charitable solicitation,” wrote Judge Bill Bowman for the unanimous three-judge panel.

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Speech seeking to drum up support — monetary or otherwise — for nonprofit organizations has broader constutional protections than commercial advertising, the appeals court ruling noted.

Value Village’s marketing serves both a commercial and a charitable purpose, because its in-store banners, signs and public-address announcements, as well as its outward-facing advertisements, “at least implicitly advocate for the views, ideas, goals, causes and values of [its] charitable partners,” Bowman wrote. The lower court’s finding that Value Village had violated Washington state’s Consumer Protection Act “does not leave sufficient breathing room for protected speech under the First Amendment to the United States Constitution,” he concluded.

This article has been updated with an additional statement from Value Village.