The jig is up: Discounts aren’t real, and consumers aren’t happy about it.
A flurry of lawsuits against retailers have been filed of late by disgruntled shoppers upset that what they initially believed to be bargain-basement deals were never sold at anything other than a reduced price to begin with.
Even Michael Kors has been accused of pulling a fast one. The affordable-luxury label last month agreed to shell out $4.8 million in damages to settle a deceptive pricing lawsuit. Meanwhile, recent research from Checkbook.org revealed that national chains such as Macy’s, Sears and Target are tricking U.S. consumers by marketing false markdowns.
Federal Trade Commission (FTC) rules on the subject state 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—but as charges have shown, this isn’t always the case.
Here’s a look at which chain stores have recently landed themselves in hot water.
Kohl’s: The mass-market retailer was smacked with lawsuits twice in six weeks. In early June, Steven Russell sued the company for advertising phony original and regular prices to customers. The complaint, filed in U.S. District Court in California, is seeking more than $5 million in damages (plus court costs) for anyone who bought products from Kohl’s between June 11, 2011 and now. A similar claim was filed July 21 in California federal court, charging the retailer with false advertising in the form of “fictitious” discounts.
T.J. Maxx: A proposed class-action complaint filed last week in California federal court by Staci Chester and Daniel Friedman accused the off-price chain of using fake ‘compare at’ pricing to sway shoppers into spending. According to the plaintiffs’ lawyer, Christopher Morosoff, “It appears that [comparable price] is just there to make me feel good about my purchase,” and that thousands of Californian shoppers have likely been tricked into buying things they wouldn’t have otherwise.
J.C. Penney: The department store chain faces pending litigation after a federal judge in Los Angeles in May certified a class-action lawsuit alleging it jacked up retail prices on private-label and exclusive items in order to deceive bargain hunters into thinking they’d scored a deal.