Retailers that advertise sale prices in comparison with regular prices in California should ensure that the products were actually offered for purchase at those regular prices within the preceding three months, in order to avoid potential litigation. Los Angeles prosecutors have initiated lawsuits against J.C. Penney, Sears, Kohl’s and Macy’s for allegedly failing to do so, accusing them of misleading shoppers into believing they were buying items at more significant mark downs than they actually did.
According to the lawsuits at hand, the four retailers allegedly tricked consumers by falsely stating the original prices in connection with “sale” prices on thousands of products. The lawsuits cite claims of false advertising and unfair competition based on alleged violation of a California state law that prohibits advertising a former price unless it was “the prevailing market price” within three months before the ad runs, unless the ad “exactly and conspicuously” states the date when that price was in effect. California law also prohibits retailers from “making false or misleading statements of fact concerning reasons for, existence of, or amounts of price reductions.”
On the heels of the initiation of the aforementioned lawsuits, each of which were filed in Los Angeles County Superior Court and seek civil penalties as much as $2,500 for each violation and injunctions to stop so-called false reference pricing to increase sales, City Attorney Mike Feuer said in a statement, “Customers have the right to be told the truth about the price they’re paying – and to know if a bargain is really a bargain.”
The four recently-filed lawsuits come on the heels of a number of other false advertising suits similarly based on the practice of misleading consumers about pricing.
Late last year, Kate Spade was singled out for falsely advertising original prices and corresponding price discounts on goods, and shortly thereafter, Macy’s and Bloomingdale's were accused of intentionally duping consumers by way of their pricing practices.
In February, Burberry was named in a potential class action lawsuit, charging it with using misleading price tags at its outlet stores in an attempt to confuse consumers as to the original price of the goods.
In April, Nike was slapped with a $5 million potential class action lawsuit, in which the sportswear giant was accused of using misleading price tags at its outlet stores. Filed in the U.S. District Court for the District of Oregon, a federal court in Portland, the lawsuit alleges that Nike “misrepresented the existence, nature and amount of price discounts on products sold in Nike Outlet stores by purporting to offer discounts off of a false ‘Suggested Retail Price,’ which the Plaintiff understood to be short for the commonly used retail phrase: Manufacturer’s Suggested Retail Price (MSRP).”
Another major suit: the one Zara is facing. In August, the Spanish fast fashion giant was accused of engaging in the widespread practice of deceiving American consumers through a classic bait and switch scheme in connection with its pricing. The $5 million-plus proposed class action lawsuit, which was filed by Devin Rose in the United States District Court for the Central District of California, a federal court in Los Angeles, alleges that Rose (and other Zara shoppers) “has been damaged in that Zara’s deceptive pricing practices caused him to overpay for the garments he purchased.”