It’s safe to say; most people feel pretty good when they buy something that’s on sale. Saving money on a purchase frees up more money for saving, or for more purchases! The savvy shopper typically believes they have the upper hand because they can price-shop on their smartphones while working the aisles of brick and mortar businesses. Retailers are constantly adjusting their in-store strategies to combat this. The most common practice is “price anchoring,” and you see it at outlet malls or discount retailers. But are some businesses going too far? Here is what you need to know about deceptive pricing.
What is Deceptive Pricing?
Deceptive pricing is the manipulation of numbers to create an illusory reference price to enhance the sale price. You might see two prices side by side showing enormous savings, or you might see the words “compare at” price on labels or signage.
The Federal Trade Commission Act, 15 U.S.C. § 45 deems unfair methods of competition unlawful, stating:
(1) Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful.
(2) The Commission is hereby empowered and directed to prevent persons, partnerships, or corporations, [except certain specified financial and industrial sectors] from using unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce.
You will also see these clearly spelled out by the FTC here:
- 233.1 — Former price comparisons.
- 233.2 — Retail price comparisons; comparable value comparisons.
- 233.3 — Advertising retail prices which have been established or suggested by manufacturers (or other nonretail distributors).
- 233.4 — Bargain offers based upon the purchase of other merchandise.
- 233.5 — Miscellaneous price comparisons.
The FTC can take action against companies making claims inconsistent with these guidelines, including issuing cease and desist orders, requiring corrective advertising, and imposing civil penalties.
Retailers Named in Allegations
Some of the biggest names in fashion are facing lawsuits or claims of deceptive pricing in 2016. These retailers include Burberry, Coach, J. Crew, Macy’s. Bloomingdales, Ann Taylor, Carter’s, Michael Kors, and Kohl’s.
Michael Kors settled one such lawsuit in February, paying out nearly $5 million and agreeing to change the language it used to compare prices. Gattinella v. Michael Kors USA, 14-cv-5731)
Deceptive pricing isn’t limited to brick and mortar businesses. Several lawsuits have targeted online retailers as well. Shoppers have made claims against Wayfair.com, Zulily.com, and Hautelook.com.
How to Protect Yourself
Antitrust laws were instituted to protect consumers by promoting fair competition, reasonable pricing, and preventing monopolies. These laws also help ensure that the consumer is able to obtain the highest quality merchandise and service at the best prices. In other words, these laws were written to provide and promote market competition, resulting in greater consumer protection.
Most price discrepancies are a mistake. But retailers can be liable for those mistakes. Whether it is deception or negligence, consumer laws are in place to protect your shopping experience. The Carter Law Firm is a top Orange County consumer rights firm. If you encounter these types of discrepancies at a specific retailer, consult an attorney. We specialize in class action lawsuits to protect your rights. If you feel you are a victim, we offer a free consultation.