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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