Kate Spade & Company Hit with Another Class Action Over Allegedly ‘Illusory Discounts’

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Kate Spade & Company finds itself on the receiving end of more potential class action litigation, as a new lawsuit alleges the retailer has advertised false reference prices and “illusory discounts” for merchandise sold at its outlet stores.

Filed in California, the case explains that the retail practice of using false reference pricing misrepresents to consumers that certain products are available at steep discounts in comparison to former prices. Whereas a consumer may believe a product is available for, say 50 percent off, this discount, according to the suit, is at worst completely illusory and at best grossly overstated. Kate Spade’s apparent reference prices do not convey the bona fide prices at which merchandise was formerly or ever sold at its outlet stores, the complaint alleges, and are a “mere fiction creation” meant to induce consumers.

Reference prices are material to consumers in that they constitute a “fundamental representation” of a product’s value and may serve to motivate a customer into making a purchase, the case continues. The plaintiff and proposed class members relied on the defendant’s price representations and so-called discounts, according to the suit, and would not have paid the amounts they did for merchandise had they known of the alleged pricing scheme.