Two proposed class actions respectively claim that items sold on dressbarn.com and pier1.com have been deceptively advertised with false “original” prices as a means to trick buyers into believing they are receiving a discount.
According to the two cases filed on May 18, defendant Retail Ecommerce Ventures LLC (REV), whose brands include Pier 1, Dressbarn, Stein Mart, RadioShack, Linens ‘n Things and others, has displayed so-called “phantom discounts” on its websites to deceive consumers into buying more of and paying more for its products.
The lawsuits say that even though the use of false reference pricing, i.e., listing a fictitious “original” price for a product and offering it for a substantial discount from that price, has been shown to violate federal and state law, sellers such as REV have continued using this retail method “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.”
According to the suits, the use of a false “original” price on an item can mislead a consumer into believing the product has a higher value than it really does, and induces the individual into making a purchase.
“This practice artificially inflates the true market price for these products by raising consumers’ internal reference price and in turn the value consumers ascribe to these products (i.e., demand),” the similarly worded complaints relay. “Consequently, false reference pricing schemes enable retailers, like Defendant, to sell products above their true market price and value—and consumers are left to pay the price.”
Under California law, a seller may only discount a product from its own original price, or that of a competitor in the relevant market, for up to 90 days, the cases state. After that point, the seller must either return the product to its original price or continue selling it at a discount as long as it discloses the date on which the product was last offered for the advertised original price, the suits say. Moreover, the Federal Trade Commission Act specifies that whenever a seller discounts a product from its own original price, the product must have been sold at that price “on a regular basis, for a commercially reasonable period of time,” the complaints state.
The lawsuits allege that REV nevertheless advertises women’s clothing and related items on dressbarn.com and home furnishings and décor on pier1.com with fictitious “original” prices meant to impart “an impression of savings.” Per the cases, the “original” price is displayed on each site with a strikethrough next to an item’s apparent sale price to “communicate to consumers that Defendant is selling a product at a substantial discount, even though the product is not in fact discounted.”
In fact, the lawsuits contest, the products sold on REV’s websites are never sold at the advertised original prices, and these prices are merely used as a tactic by which to “deceptively manufacture false discounts to incentivize consumers to make purchases.”
In this way, REV has been able to increase sales by “creating the illusion of short-lived bargains” even though consumers, in truth, are paying “the usual retail price for products,” the cases claim.
The lawsuits look to represent anyone in California who, within the applicable statutory period, purchased from dressbarn.com or pier1.com, respectively, one or more products at discounts from an advertised reference price and have not received a refund or credit for their purchase.
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