Everyone loves saving money – and knowing how much you’re saving only makes the deal seem sweeter. Why pay full price when so many outlet stores are offering huge discounts? Even better, with the department store price clearly listed next to the discounted price, shoppers can find out exactly how much they’re saving. That is, at least, the idea.
But what if the department store prices - the higher prices that are only shown to let shoppers know they’re getting a good deal - are false? That’s exactly what several major retailers have been doing, according to a string of recent lawsuits taking aim at the “compare at” prices of stores like TJMaxx, Kohl’s, The Gap, and Banana Republic. Shoppers aren’t happy, and if these class action lawsuits are successful, retailers may owe thousands of people a lot of money.
A lawsuit filed in California last week accuses TJX Cos. Inc., the parent company of TJMaxx, of inflating its “compare at” prices in order to make its own prices seem comparatively cheaper. In fact, TJMaxx’s “compare at” prices are only estimates, reflecting the price that products may have been sold at, at some time, somewhere in the United States, the suit says. The only way to find this out, however, is to search out the company’s explanation of its pricing, available through one link on the TJMaxx website. All this despite guidelines from the Better Business Bureau that language used to compare prices should be clear and accurate.
The complaint, filed in the United States District Court for the Central District of California, is very clear on its purpose: “This is a case about deceptive advertising,” it begins, “about one of the nation’s largest retailers using deceptive comparative prices to trick its customers into mistakenly believing they are saving specific and substantial amounts on name brand items.” It goes on:
“[TJMaxx]’s comparative price assures consumers […] that they are receiving an exceptionally good deal and saving a specific dollar amount equal to the difference between the two prices. Defendants’ price tags deceptively instruct customers to ‘compare’ the sale prices of their products to these higher comparative prices. The comparative prices, however, are false. They are not true, bona fide comparative prices. Plaintiffs, having been duped by [the company’s] deceptive pricing practices like all other TJ Maxx customers, bring this action […] for false, deceptive and misleading advertising on behalf of themselves and all other consumers who have purchased items at TJ Maxx stores in California throughout the period from July 17, 2011, to the present.”
The lead plaintiffs in the suit, California residents Staci Chester and Daniel Friedman, allege that they chose to shop at TJMaxx specifically because of the lower prices – and, now that they’ve learned the higher “compare at” prices may have been inaccurate, are seeking a judgement against the company, stripping it of the profits gained through the allegedly misleading advertising and granting compensation to consumers.
TJMaxx isn’t the only company currently facing lawsuits for its use of price comparisons. On July 21, Kohl’s was hit with a proposed class action suit alleging the company violated false advertising laws by quoting fake prices when marketing its own sale items. As the complaint puts it:
“Kohl's, at a time it was aware of the psychological and emotional impacts of a ‘sale’ or marked-down price has on consumers, utilized misleading, deceptive and false advertisements in, among other communications, print advertisements, internet marketing and sales, and in-store advertisements which claimed significant and substantial sales and discounts based upon alleged - but fictitious – ‘original,' ‘regular,’ or former prices of the products it advertised.”
These allegations are different to those levied against TJMaxx, which faces claims it misquoted other company’s prices, rather than its own. In a way, Kohl’s misleading prices seem even worse, since it seems pretty clear the company knew it had never sold products at the prices it claimed, according to the suit. The case was filed in the United States District Court for the Southern District of California and seeks to cover all anyone who purchased items from Kohl’s advertised at a discount of 30% or more in the state of California between July 21, 2011 and present day.
So, what’s the take away from this? That stores aren’t to be trusted? Or that shoppers need to be wary when deals seem too good to be true? It looks like the old adage – caveat emptor, let the buyer beware – is as true today as it ever was. The law is on consumers’ side, and it’s good to see these companies facing lawsuits for practices that may have misled consumers. It’s likely that in the next few months there’ll be several more lawsuits filed as shoppers catch on to what businesses are doing. We’ll keep you posted as the news come through.