Zara is being brought to court after allegedly misleading American consumers with deceptive pricing.
The European retailer was pegged with a $5-million-plus proposed lawsuit, filed by Devin Rose in the United States District Court for the Central District of California in Los Angeles, The Fashion Law reported. The lawsuit claims that Rose, in addition to other Zara customers over the years, “has been damaged in that Zara’s deceptive pricing practices caused him to overpay for the garments he purchased.”
Rose pursued legal action against Zara after he purchased three shirts at the retailer’s location in Sherman Oaks, California, in May. At the time he bought his clothing, the lawsuit stated, “The actual euro-dollar exchange rate would have resulted in his €9.95 shirts costing approximately $11.26 each. Instead, however, Zara charged Mr. Rose $17.90 per garment, a markup of nearly 60%.” As a result of Zara’s price markups, other Zara consumers could have potentially experienced the same situation, paying more for items that don’t reflect the current exchange rate.
The lawsuit explained how Zara allegedly engaged in “bait-and-switch pricing,” which involved Zara only marking its products with euro prices. This could potentially confuse consumers when they purchase Zara’s apparel, because the converted American price is not posted on tags.
The lawsuit also said, “Compounding matters, not only is the same product sold for a substantially higher amount in dollars, but the product is always sold well in excess of the true converted amount if the euro price on the tag were properly converted to dollars.” With this practice, Zara could potentially sell its clothing for higher prices, without consumers knowing the true amount of their products until they reach the register—which is what happened to Rose.
Should Zara be found guilty of deceptive pricing, it would be in violation of state and federal laws for not disclosing currency differences to consumers.
Zara refuted Rose’s deceptive pricing allegations in a statement sent to The Fashion Law:
“Zara USA vehemently denies any allegations that the company engages in deceptive pricing practices in the United States. While we have not yet been served the complaint containing these baseless claims, we pride ourselves in our fundamental commitment to transparency and honest, ethical conduct with our valued customers. We remain focused on providing excellent customer service and high-quality fashion products at great value for our consumers. We look forward to presenting our full defense in due course through the legal process.”