Business Communication and Character

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Retailers Sued for Fake Sales

Amy Newman

Macy'sWhen is a sale not really a sale? Macy's, Kohl's, JCPenney, and Sears are facing lawsuits  for "false reference pricing"-showing prices as "regular," "list," or "original" when they never were. According to the Consumerist:

Under California law, retailers are prohibited from advertising an alleged former price of an item less the alleged former price was the prevailing market price within three months of the advertisement, or unless the date when the former price was in effect is clearly advertised.

To this end, the city [Los Angeles] claims that thousands of "sale" items were advertised at false reference prices.

In other words, items marked on sale were never sold at the so-called "original" price, and that's a misrepresentation.

The Los Angeles attorney who filed the suits said, "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. My office will fight to hold retailers responsible for their practices and to ensure consumers can make informed choices when spending their hard-earned money."

Checkbook.org brought a similar suit against some of these retailers in 2015.  At that time, Sears made this statement:

"Sears disagrees with any suggestion that its pricing is misleading or deceptive. Sears is focused on providing its members with great prices on a wide variety of products and services," adding that it "complies with applicable pricing and advertising laws." 

"... as a multi-channel, leading integrated retailer we are uniquely positioned to provide discounts to our members and customers in a number of different, legally compliant ways, including things like member pricing, store or online only promotions, clearance offers, and offers from third-party marketplace sellers," the statement said. "It is unfortunate that Checkbook.org did not appear to take these factors into account before making its assumptions."

Macy's issued its own statement, according to an NBC story:
 
Macy's, in a statement, said pricing varies for each item, "based on the nature and seasonality of the merchandise, its family of business and customer response, among other things. Some items rarely go on sale prior to final clearance; others go on sale more frequently as part of promotional events."

Image source.

Discussion Starters:

  • How are you influenced by advertised "sales"? 
  • How believable do you find the two statements from 2015? What defense will the retailers bring to this suit?