A proposed class action in California alleges Dress Barn advertises products online with fake “original” prices and corresponding “phantom discounts.”
The 27-page case claims that the artificial price disparity between Dress Barn’s purported “original” price and the apparent discount on an item misleads customers into believing the product has a higher market value, inducing them into making a purchase. The suit contends that Dress Barn never sells its products at their purported “original” price, which is displayed online with a strikethrough, and the “deep discount” consumers believe they’re getting is a misrepresentation by the retailer.
“Consequently,” the lawsuit says, “false reference pricing schemes enable retailers, like Defendant, to sell products above their true market price—and consumers are left to pay the price.”
According to the lawsuit, some retailers, including Dress Barn, continue to use the tactic of false reference pricing because they know they will be able to increase sales and profits by tricking consumers into making purchasing decisions based on the advertised prices. The suit adds that reference prices are crucial to consumers when making purchasing decisions, and are often “the first, if not the only, insight into a product besides the sale price itself.”
“Sellers, including Defendant, understand consumers are vulnerable to perceived bargains,” the lawsuit says. “Thus, Defendant has a substantial financial interest in exploiting consumers’ well-known behavioral tendencies by inducing consumers into believing they are receiving a bargain—even when they are not.”
Under California law, a seller may only discount an item from its own original price for up to 90 days, the case states. In the alternative, a seller may offer a discount from the original price of a competitor’s product, within the relevant market, for up to 90 days, according to the complaint. In either scenario, the suit says, the seller can only offer a “sale” from an original price for 90 days.
On day 91, the seller must either return the product to its full original price or continue to sell the item at the discounted price, as long as it discloses to consumers the date on which the product was last offered for sale at its former price, the filing says.
The suit looks to represent all persons in California who, within the applicable statutory period, purchased from Dress Barn’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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