Made-to-measure men’s clothing company Indochino Apparel is on the receiving end of a proposed class action lawsuit over its alleged use of fictitious reference pricing and “phantom discounts” for its products.
Indochino is a custom-fit clothing company that offers consumers two avenues through which to make purchases, the suit explains. One way is for customers in search of a suit, pants, a blazer or a tuxedo to complete entire purchases online through its website, inputting their measurements through a three-step process, the case says. Alternatively, customers can visit Indochino’s retail stores to get measured by an employee should they wish to order their clothes in person.
The lawsuit claims that Indochino engages in a pricing scheme by which it deceptively claims its clothing is on sale, i.e., that a particular product was sold previously at a substantially higher price. According to the complaint, however, Indochino’s clothing has never been sold at or near this substantially higher “reference price” off which the alleged sale price is based. Indochino’s clothing has instead always been sold at its purported “sale” price, the suit says, with this phantom discount derived from what the case calls “false reference pricing.” From the complaint:
“The practice of false reference pricing occurs when a company fabricates a fake regular, original or former reference price, and then offers an item for ‘sale’ at a price that is deeply discounted to the fabricated reference price. In these situations, the deeply discounted price is not in fact a discount because it is the price at which the item is customarily sold.”
Under California law, the case states, the fair market value for private label products like those offered by Indochino is the price at which the product is regularly sold. The net effect of Indochino’s allegedly false reference pricing is that consumers receive “substantially less quality and value” than what’s being advertised. What’s more, reasonable consumers, the suit says, have no way to independently verify the value of Indochino’s clothing prior to purchase given their reliance on the company’s assertations of its reference pricing.
Though Indochino has showrooms across California, the suit sticks on the defendants’ position as a primarily online retailer. According to the case, Indochino, armed with customers’ online profiles created during the ordering process, sends near-daily emails touting purported sales based on allegedly false reference prices. Indochino, the suit claims, has engaged in “a continuous and uniform multimedia advertising campaign” centered on apparent deals that it primarily implements through its website and social media.
“Indeed, Defendants’ false and misleading advertising led Plaintiff to believe he was purchasing high quality custom made-to-measure men’s clothing at a steep discount,” the suit reads, “when he was actually paying the standard retail price for lower quality Clothing set by Defendants.”