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Saks Inc. Chargeback Case to Move Forward

The chargeback case against Saks Inc. will go forward, a Manhattan federal district court judge ruled in late March. Judge Kevin Castel rejected Saks' request to dismiss most of the claims filed against it by International Design Concepts two years ago.

IDC's suit alleges breach of contract and fraud related to Saks' chargebacks and markdown allowances, which the vendor claims forced it out of business.

In a previous filing, IDC stated that Saks represented 60% of its sales. The company asserts that it invoiced Saks for $90.2 million worth of licensed Oscar de la Renta women's bridge sportswear from 1996 to 2003, but that Saks levied chargebacks and allowance deductions of $31.3 million — or 35% of sales.

In the same ruling, the judge granted Oscar's motion to intervene in the case. Oscar had filed a state court action against IDC and others for about $1 million it says it is owed on royalties. The new ruling allows Oscar to collect that fee from IDC should the plaintiff prevail in its suit.

In 2005, Saks confirmed an internal investigation of one of its merchandising divisions that found it improperly collected $26 million in vendor markdown allowances from 1999-2003.

The improper allowances were determined to have come from the bridge department.

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