You bought a TV on Black Friday for $277.99, marked down from $479.99. Score! Or is it? Would you be surprised to learn that the retailer meant for that TV to be sold at $279.99 all along?
The law may provide remedies for aggrieved discount shoppers. The Federal Trade Commission (“FTC”) helps protect us from ourselves. We love the feeling of getting a deal so much that we are willing to shell out money if a product purports to be 40% off–no matter what the actual price. Generally, a store can offer whatever prices it wants. But it cannot engage in deceptive advertising. It is deceptive to advertise a product as being “40% off” unless the store actually offered the product at the price that was 40% higher.
FTC Guidelines require retailers to offer a product at its list price “for a reasonably substantial period of time” before claiming they are offering it at a discount. It promulgated this guideline in 1978, at a time when discount pricing became a popular advertising tactic for retailers facing stiffer competition. State consumer laws also provide remedies to customers who have been the victims of deceptive advertising.
Las year, a Los Angeles County woman filed a lawsuit against JC Penney for purportedly offering fake discounts. Cynthia Spann purchased three blouses at $17.99 each. Though JC Penney advertised them as being 30% off $30 each, the blouses had actually previously been sold at the $17.99 price. Spann alleges she would not have bought the blouses without the discount. Similar cases have been filed against Kohl’s in California (Hinojos v. Kohl’s) and Jos A. Bank in Ohio (Schneider et al. v. Jos A. Bank).
In the meantime, you can use non-law retail “self defense”: keep an anchor price in your head about what a product is really worth. A good price is a better deal than a discount off of an inflated price.
For more:
- FTC Guidelines: 16 CFR 233.1 (via Legal Information Institute) (via FTC.gov) (“[W]here an artificial, inflated price was established for the purpose of enabling the subsequent offer of a large reduction — the ‘bargain” being advertised is a false one; the purchaser is not receiving the unusual value he expects. In such a case, the ’reduced’ price is, in reality, probably just the seller’s regular price.”)
- 15 USC § 45; 15 USC § 46
- Kwikset Corp. v. Superior Court, 246 P.3d 877 (Cal. 2011) (via Stanford)
- Kevin Spak, Newser, Discounts Are Kind Of … a Lie (Nov. 29, 2013)
- Suzanne Kapner, Wall Street Journal, The Dirty Secret of Black Friday ‘Discounts’ How Retailers Concoct ‘Bargains’ for the Holidays and Beyond (Nov. 25, 2013).
- Matthew Ong, The Fiscal Times (writing for The Week), Black Friday ads: 4 sneaky pricing tricks — and how to spot them (Nov. 28, 2013) (“In Bon-Ton’s 2013 Black Friday ad scan, for example, the retailer advertises a $99.97 price for the Keurig K45 Elite Brewer, down from the regular $172, according to Bon-Ton. If you checked out Bon-Ton’s website at the time of this writing, though, you’d find that same Keurig K45 coffee brewer selling currently for $119.99. Bon-Ton’s Black Friday Keurig K45 price isn’t a bad one — but it isn’t exactly $72 off.”)
- Lawsuits
- Cynthia E. Spann v. J.C. Penney Corporation Inc., et al.
- ECF No. 8:12-cv-00215, District Court, Central District of California
- Complaint filed Feb. 7, 2012 (alleges company misled customers by placing sale signs over items that were actually regularly priced)
- Info on Justia – includes link to Docket Entry #37, Stipulated Protective Order
- Info on Law 360–behind a paywall
- Susanna Kim, ABC News, J.C. Penney Returns to Coupons and Marks Up Prices (Jun. 5, 2013) (“J.C. Penney, responding to reports that it is marking up prices in stores only to discount them later, is defending its return to sales and coupons after a disastrous foray into everyday low pricing.”)
- John Matarese, WCPO, JCPenney slaps new high prices on goods: Consumer Investigation (May 17, 2013) (“Based on viewer tips that prices were suddenly higher, we went to two JCPenney stores in the Cincinnati area, one on Colerain Avenue and the other on Fields Ertel Road. In each, we found items with new, higher priced stickers covering up lower prices.”)
- John Schneider, Andrew Bucher and Robert Smith v. Jos. A. Bank
- ECF No. 2:13-cv-00756, District Court, Southern District of Ohio
- Complaint filed May 24, 2013
- “Study upon study has shown that this type of deceptive marketing is effective in attracting consumers and increasing the likelihood they will buy a given product,” says Daniel Frech, an attorney for the Plaintiffs. “They think they are getting a bargain because they are buying a suit that other consumers paid $595 for a half or a third of that price – but, as the New York Attorney General’s report makes clear, almost no one ever actually pays $595 for that suit.’”
- Info via PRWeb
- Info from law firm site
- Antonio S. Hinojos, individually and on behalf of all others similarly situated v. Kohl’s Corporation and Kohl’s Department Stores, Inc.
- ECF Ninth Circuit No. 11-55793; D.C. No. 2:10-cv-07590-ODW-AGR
- May 21, 2013 Appellate Opinion (“Most consumers have, at some point, purchased merchandise that was marketed as being “on sale” because the proffered discount seemed too good to pass up. Retailers, well aware of consumers’ susceptibility to a bargain, therefore have an incentive to lie to their customers by falsely claiming that their products have previously sold at a far higher ‘original’ price in order to induce customers to purchase merchandise at a purportedly marked-down ‘sale’ price. Because such practices are misleading—and effective—the California legislature has prohibited them.”
- Rick Romell, Milwaukee-Wisconsin Journal Sentinel, Kohl’s loses appeal in California false-advertising lawsuit (May 30, 2013) (court reinstated “potential class-action claim that Kohl’s falsely portrayed merchandise as being sold at large discounts from the original prices”)
- Maura Dolan, Los Angeles Times, Kohl’s can be sued over sale ads, court says (May 22, 2013) (“[The Ninth Circuit] says California permits lawsuits alleging false markdowns if the customer would not have made the purchase but for the perceived bargain.”)
- Cynthia E. Spann v. J.C. Penney Corporation Inc., et al.
Image courtesy Robert Banh
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