Lawsuits for Fake Sale Prices

A number of major retailers and outlet stores – including J.C. Penney and Michael Kors – have been hit with lawsuits alleging they deceived consumers with their “compare at” pricing and similar markdowns. The suits claim that the stores are leading consumers to believe they are saving more money than they actually are by comparing “sale” prices to prices that the products were never sold at.

Fake Markdowns: What’s the Problem?

Lawsuits are claiming that companies are breaking a federal law that states an item with a list or retail price must have been sold for that amount at some point in time. For instance, Michael Kors outlet stores got in trouble with the law for selling products that were allegedly made specifically for their outlets – but were tagged with original retail prices for consumers to compare their savings to. The woman who filed the class action claims that she paid $79 for a pair of jeans that were tagged with a list price of $120 but that were never actually sold in Michael Kors retail stores. Some states also have laws that strengthen the federal regulations. California, for example, requires that an item be sold for a certain length of time before being put on sale.

Class Action Lawsuits for Fake Prices

A number of companies have already been sued over “phantom” markdowns. These stores include:

• TJ Maxx
• Kohl’s
• Ross
• Justice

Two companies already settled cases, with J.C. Penney paying out $50 million and Michael Kors Outlet Stores agreeing to a $4.8 million settlement agreement.

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