Lawyers for Jaimie Hernandez filed a class-action complaint last week alleging the women’s apparel retailer engaged in “a false and misleading reference price scheme” whereby goods were listed with “fictitious” original prices that were rarely, if ever, the actual price. The complaint requested a court order certifying a class of “at least thousands of individuals.”
California law requires sellers only discount an item from its “original price” for up to 90 days. Alternatively, they can offer a discount from the original price offered by a competitor, within the relevant market, for up to 90 days. In both cases, after 90 days, the seller must either return the item to its full original price or disclose the date on which it was last available for its reported original price.
Products on Dressbarn’s site—it closed all brick-and-mortar stores in 2019—list two prices: a higher, crossed-out price in gray and a second, lower price in red. Items listed on its homepage under “fresh new looks” use a slightly different format that includes the word “was” before the crossed-out, higher price.
Hernandez’s lawsuit alleged the company’s products “are never sold at the price displayed with a strikethrough.” It also claimed that Dressbarn does not disclose that the reference prices are not former prices, not recent and not prices at which “identical products” are sold elsewhere. These omissions, combined with the “fictitious” reference prices, make the “pricing scheme inherently misleading,” the complaint said.
“The reference prices only serve to deceive consumers; they function as benchmark prices from which the false discount and corresponding ‘sale’ price are derived,” the filing argued. “Defendant’s scheme tricks consumers into justifiably believing they are getting a significant deal when, in reality, consumers are paying the usual retail price for products.”
The filing includes details from an “investigation” that Hernandez’s lawyers said they carried out. From this research, her counsel said they “confirmed” that the products she bought were listed at the discounted price for at least the 90 days preceding her purchase. These items, the complaint noted, were not and are not available in any other market. Using a “sophisticated software program,” the plaintiff’s legal team also tracked the pricing of certain merchandise on the Dressbarn website over “various periods” from 2020 to today.
“For the duration of the tracking period, each product remained significantly discounted from its reference price,” the complaint said. “The investigation indicated the false reference pricing scheme was uniform across defendant’s e-commerce website.”
Hernandez’s suit alleged Dressbarn’s actions violated California’s Unfair Competition Law, False Advertising Law and Consumers Legal Remedies Act. It asked that the court award her and other potential class members restitution and disgorgement of all profits obtained via unlawful business practices and actual, statutory and punitive damages. It also requested Dressbarn be required to cease its markdown practices and engage in a “corrective advertising campaign.”
Boohoo was hit with a similar complaint back in April 2020. By November that year, the suit had been combined with similar complaints from two other consumers against Boohoo sister brands PrettyLittleThing and Nasty Gal. By July of last year, it appeared the company’s co-founder Mahmud Kamani would be forced to appear in court for a virtual, four-hour deposition.
That deposition never materialized, however, because by November 2021, the two parties had hammered out the preliminary terms of a settlement, with Boohoo agreeing to pay out 19.1 million pounds. The total was equivalent to $26.1 million at the time. Due to currency exchange fluctuations, it is now closer to $24.5 million.
At the time, Boohoo warned that there was “no guarantee” that continuing talks wouldn’t fall apart. Months later, the case remains unsettled. Late last week, the court filed an order requiring the parties file by May 16 either a motion for preliminary approval of the class settlement or a schedule for the completion of class discovery, including a proposed date for the filing of a motion for class certification.