A proposed class action alleges Ashley Furniture Industries has deceived consumers by advertising products on its website with fake “original” prices and corresponding “phantom discounts,” creating the illusion of savings.
The 26-page case in California alleges Ashley’s use of false reference pricing has misled consumers into believing certain items have a higher market value than they actually do, and induced them into making purchases. This type of “scheme,” the suit alleges, enables retailers such as Ashley Furniture to sell products at prices above their true market value.
“It is well-established that false reference pricing violates federal law and various state consumer protection statutes,” the complaint states. “Even so, sellers, including Ashley Furniture, continue to use the tactic because they know they will be able to increase sales and profits by tricking consumers into making purchasing decisions based on the advertised reference prices.”
The complaint argues that retailers understand that consumers are vulnerable to a perceived bargain. Ashely Furniture thus has a financial interest in “exploiting consumers’ well-known behavioral tendencies” by inducing them into believing they are receiving a deal, even when they are not, the case claims. Reference prices are often the first, if not the only, insight consumers have into a product besides its sale price, and the reference price is thus used as a baseline upon which to perceive an item’s value, according to the suit.
Under California law, a retailer may only discount an item from its true original price for up to 90 days, the case states. In the alternative, a seller may offer a discount from the original price being offered by a competitor, within the relevant market, for up to 90 days, according to the filing. In either scenario, the lawsuit says, a seller can only offer a sale from an original price for 90 days; on the 91st day, the product at issue must either return to its full original price, or the seller may continue to sell it at the discounted price as long as it discloses to consumers the date on which the item was last offered for sale at its alleged former price, the case stresses.
With regard to Ashely Furniture in particular, the suit claims that the company regularly advertises a product’s seemingly original price with a strikethrough, and a discount percentage is often shown alongside the “original” price. This communicates to consumers that a particular product is for sale at a substantial discount, even though it is not in fact discounted, the case contends.
Nowhere on Ashley Furniture’s website does the company disclose that the advertised “original” prices are not former prices, or recent, or being offered within 90 days of a regularly offered former price, or the prices at which identical products are sold elsewhere on the market, the lawsuit says.
The lawsuit looks to cover all persons in California who, within the applicable statutory period, bought from Ashley Furniture’s website one or more products at discounts from an advertised reference price and who have not received a refund or credit for their purchase.
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