Forget buyer beware—retailers should think twice before slapping discount stickers on merchandise.
In the past 12 months, chain stores spanning J.C. Penney and Kohl’s to T.J. Maxx, as well as the outlet arms of Michael Kors and Kate Spade, have been hit with a wave of class-action lawsuits filed by disgruntled shoppers who said they were duped into purchases by phantom prices.
This week, a woman in California took aim at three more: children’s store Carter’s; Ascena Retail Group, parent company of Ann Taylor and Loft; and PVH, owner of Tommy Hilfiger’s wholesale business and Calvin Klein.
According to Law 360, Siobhan Morrow of San Diego on Wednesday filed a complaint in a Southern California district court accusing the three companies of using misleading labels on merchandise sold in their outlet stores which ultimately tricked her into thinking she was getting a bargain.
Law firm Carlson Lynch, which is handling the case on behalf of Morrow, is no stranger to false advertising litigation. Last August, one of the firm’s lawyers represented Joshua Teperson of San Diego in a similar suit against Sears. Teperson said he purchased items that were allegedly on sale, but when he researched the prices he discovered they were never sold at full price to begin with.
The firm is also co-lead in a claim against Saks, filed in December, which accused the retailer of marking its private-label products as deeply discounted by comparing them to “artificially inflated” market prices.
Elsewhere, after suing J.C. Penney earlier this week for selling coats and scarves featuring illegal replicas of its trademark plaid print, Burberry has found itself on the other end of a lawsuit. Reuters reported Friday that the British luxury brand has been accused by a U.S. consumer of “intentionally presenting false price information on products [at its outlet stores] that have never been sold in its retail stores.”
The advertising and marketing of merchandise is regulated in the U.S. by the Federal Trade Commission (FTC), which states that a store’s products must be openly and actively sold at the regular price for a “reasonably substantial period of time” before being discounted.
Macy’s, for one, is trying to be upfront about its pricing policy on its e-commerce website. A hyperlinked note on each product page points out that savings are not based on actual sales. The pop-up window that appears when that link is clicked says, “‘Regular’ and ‘Original’ prices are offering prices that may not have resulted in actual sales, and some ‘Original’ prices may not have been in effect during the past 180 days.”