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City of Los Angeles Sues JCPenny, Kohl’s, Sears, and Macy’s Over “False Reference Pricing”

City of Los Angeles Sues JCPenny, Kohl’s, Sears, and Macy’s Over “False Reference Pricing”

Consumer protectionism or a litigious nanny-stating?

The City of Los Angeles filed suit against four big-name retailers late last week, alleging misleading prices.

Allegations suggest the retailers deliberately increased the original price of items then placed them on sale, thus providing the appearance of false savings to would-be consumers.

CNN Money reports:

“Customers have the right to be told the truth about the prices they’re paying — and to know if a bargain is really a bargain,” said Mike Feuer, city attorney for Los Angeles, in a release.

Feuer filed lawsuits against JCPenney, Kohl’s, Macy’s and Sears.

The lawsuits allege that the “misleading and deceptive false price advertising scheme” played a major role in the stores’ marketing strategies, and that the companies used false reference prices on “thousands of products.”

For instance, the lawsuit against Sears (SHLD) alleges it advertised a front-load washer with a false original price of $1,179.99, but the retailer never offered the item for more than $999.99 online in the roughly six months after it was first made available online for purchase.

The claim against Macy’s (M) alleges it misleadingly offered a cross pendant necklace at 75% off. The lawsuit claims the necklace was first made available to purchase online in May for $30 with an original price of $120. However, it’s never been priced above $30 in the five months that followed, according the claim.

None of the retailers have commented.

Consumer protectionism or a litigious nanny-stating?

It seems obvious enough that the price of an item is whatever a consumer will pay, regardless of whether the item is adorned with a big, red “sale” tag. The suits seem to ignore a basic economic principle — if you purchase an item with an original price of $100, but on sale for $75 — you have not saved $25, you’ve spent $75.

If successful, the complaint likely won’t render a hefty judgement. The civil penalty for each violation is $2,500. “California law prohibits retailers from advertising a price of an item unless it’s actually been on the market at that price within the last three months or the date when it was being sold at that price is made clear to shoppers,” according to CNN.

The complaint:

Los Angeles vs. Macy's, JCPenny's, Sears, and Kohl's by Legal Insurrection on Scribd

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It is a common false advertising trick, and it is still false advertising.

    healthguyfsu in reply to Valerie. | December 12, 2016 at 7:25 pm

    False advertising is offering one price to one person and another price to someone else. This is a bs lawsuit money grab.

call it what it really is: a government shakedown of industry.

will all the things wrong with the City of Lost Angels, *this* is what the idiots down town are worried about?

yeah, right… when is the City Attorney up for re-election?

and how much is this suit costing us taxpayers?

there’s the real crime

    MattMusson in reply to redc1c4. | December 13, 2016 at 9:07 am

    When they finally settle this lawsuit – I bet the money goes to some community organizers for financial education programs for the poor i.e. “yipee, we are all getting new Lexus convertibles!”

Customers have the right … to know if a bargain is really a bargain

This is meaningless.

How is the state—or the vendor—to determine what a “bargain” is? Can the state really require Sears to tell customers that the marked price of a washing machine is lower than it was before, but it’s not much of a “bargain” because Lowe’s has a better machine on sale?


Just as the consumer is the only one who can determine what he is willing to pay for goods or services, he is also the only one who can evaluate a “bargain”. Not even a diehard socialist would claim that the government can determine that, or that it should require the vendor to determine it.

Prices should be marked, of course. And I don’t see that anyone is claiming that they aren’t.

I’d believe it of Kohl’s, never believed the BS on the receipt that I saved X amount of dollars. But then again I’m not a proud holder of a Los Angeles high school GED certificate either.
Haven’t been to a Penny’s, or Sears in over 30 years. Don’t recall ever going to Macy’s. Our local Meijer’s works just fine for most of the daily living things I need.

    healthguyfsu in reply to 4fun. | December 12, 2016 at 7:27 pm

    This is common practice, even at a grocery store. If you want to file suit as a private citizen that’s fine. The government filing this suit is all about grandstanding about the evils of capitalism and power mongering by the socialist dreamers.

There’s some pretty good research that shows establishing high reference prices in a customer’s mind works surprisingly well in getting customers to place a higher value on what’s offered and thus be willing to pay more for it.

Nonetheless, customers should be smart enough to realize that no one “saves money” in a store. At least, not unless the store has a bank in it. Truly, all one can do with money in a store is spend it, and, spending is obviously the opposite of saving.

The law should work the other way – since Coca Cola used to cost 5c it can never go on sale again.

No seriously, it seems like a well intentioned but unenforceable law since any company can just change prices on its website at a moments notice, sometimes even retroactively.

People is California must need a lot of protection. LOL!

LOL, the California commies need to go to any retail outlet selling women’s clothing.

They’ll all have strokes and die.

So, we have laws against misleading advertising [which this constitutes]. We have laws against bait and switch. We have laws against price gouging. Then we have laws against price fixing [which is becoming a common practice in many retail industries again]. So, what is the difference here?

Mark-up to mark-down has been a common practice among large retailers for the last 50 years. It was common practice to mark an item up just prior to putting it on sale. Now, no one with an ounce of intelligence would even attempt to claim that raising the price of an item 50% then offering 1/3 off is anything other than a deceptive practice, as the mark-down merely returns the product to its original price. If retailers do not want to end up being penalized for fraud, then it might be a good idea not to engage in fraudulent practices to begin with.

If were an honest merchant (where a discount is truly a discount), and my competitors were distorting the public perception with those practices, I’d be mad. I’m glad the government is trying to level the playing field for honest folks.

Is this really any different than the MSRP, which is almost always well above any actual selling price you’ll ever see?

my used 2010 marquis was a bargain for me at (with taxes/etc) 18K $
for others it was not a bargain.
getting a bargain is a beauty in the eye of the beholder scenario.

You pretty much have to be ****ed in the head to try and operate a business in Kali.

And, yeah, yeah, it’s a big market, blah, blah, blah.

But, consider.

If you’re the worst state for truckers, you’re pretty much hosed when it comes to commerce.

Actually, they’re CARB regulations, not EPA. But for the most part the information is accurate.

“…These specific California regulations, enforced at the start of this year, require trucks weighing more than 26,000 pounds to install PM retrofits to reduce emissions. By January 1, 2015 older trucks will need to be replaced with newer engine models, which release less PM and oxides into the air. Trucks weighing 14,000 pounds to 26,000 pounds will be forced to install PM retrofits by January 1, 2015. By 2020 older trucks will need to be replaced with newer engine models and by 2023 all trucks will be required to have 2010 engine models. Specific details on replacing engine models as well as provisions for credits and exemptions can be found here.

The cost of CARB regulation is an overwhelming burden for businesses, especially small businesses. According to the California Environmental Protection Agency (CEPA), the new PM retrofits (including the filter, back pressure monitor, installation and warranty) costs anywhere from $10,000 to $20,000. California EPA…”

What the article doesn’t do, it seems to me, is make clear that Kali provided incentives to for fleet operators to a upgrade to a lower standard just a couple of years earlier. But they didn’t know it was a lower standard than CARB was going to demand in the not so distant future. So they’re out of Schlitz. So they’re one and done. They can’t afford to buy new trucks or engines.

I’d say that when you are the mayor of Oakland, and your husband and daughter are helping to blockade the port of Oakland, you have no head for business.