Old Navy Lists Fake 'Original Prices' to Create Illusion of Discount, Class Action Says

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A proposed class action lawsuit claims that Old Navy, LLC lists false or misleading original prices to create the illusion that items are being sold at a discount.

According to the case, Old Navy has implemented a “uniform policy” of listing both a “base price,” represented as an item’s original or regular cost, along with a discounted “sales price” for “every item” sold in its New Jersey retail and outlet stores. The case claims Old Navy’s pricing policy was designed to take advantage of consumers’ belief that the base price represents the typical cost of an item and that the sales price represents a discount from that original price. The complaint alleges that this “technique is widely used” as “everybody loves a bargain”:

“Indeed, numerous studies show that a consumer is much more likely to purchase an item if they are told that it is being offered at a price less than the price at which the seller or its competitors have previously sold the product; where they are being told that an item is worth much more than what they are currently being asked to pay for it.”

The lawsuit contends, however, that the listed original prices are higher than any amount Old Navy ever charged for the items and that the defendants’ “sale” prices represent the amount for which the products are typically offered.

Thus, the case argues, instead of purchasing discounted products, Old Navy customers are “simply buying an item at the same price – or approximately the same price—at which Defendants regularly and consistently sell the item in question.”  

According to the case, New Jersey’s Consumer Fraud Act forbids companies from including a “fictitious former price” on items that are listed at a discount. A “former price” is considered fictitious, the statute says, if it can’t be shown that the product (or a similar one) was sold “a substantial number of times” at the listed cost during its first or most recent 60 days of sale or was offered at the original price for at least 28 of the last 90 days, the suit explains.

The lawsuit looks to represent a class comprising all New Jersey citizens who purchased a purportedly discounted item from an Old Navy store in New Jersey between January 8, 2014 and the present.

Originally filed in the Superior Court of New Jersey, the case has since been removed to U.S. District Court for the District of New Jersey. Old Navy, LLC; Old Navy (Apparel), LLC; Old Navy Holdings, LLC; GPS Services, Inc.; and The Gap, Inc. are all listed as defendants.