‘Sham Markdowns’: Lawsuit Alleges Shutterfly Advertises Products at False Discount Prices [UPDATE]
by Erin Shaak
Last Updated on February 19, 2024
Rivali v. Shutterfly, LLC
Filed: April 1, 2022 ◆§ 2:22-cv-02175
A class action claims Shutterfly advertises its products with false reference prices in order to give the impression that customers are receiving a discount.
California Business and Professions Code California Unfair Competition Law California Consumers Legal Remedies Act
California
November 2, 2023 – Shutterfly “Sham Markdown” Lawsuit Settled
The claims detailed on this page have been settled as part of a deal that provides eligible Shutterfly customers with vouchers to use toward any purchase on the company’s website, among other relief.
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The deal, which received preliminary approval from the San Diego County Superior Court on August 25, 2023, covers all persons in the United States who, between April 1, 2018 and August 25, 2023, bought from Shutterfly.com one or more products at discounts from an advertised reference price, and who have not received a refund or credit.
The official settlement website can be found at https://sfdiscountsettlement.com/.
Through the settlement, eligible consumers who file a timely and valid claim can receive a voucher for up to $25 off any online purchase at Shutterfly.com. The settlement site says that class members who do not file a claim for compensation by the deadline will receive one voucher worth up to $5 toward any purchase on Shutterfly’s website.
To file a claim, head to this page. If you received a claimant ID number and PIN in a notice email about the settlement, enter them in the top fields on the page. If you did not receive a claim number and PIN, enter your email address in the bottom field and hit “Submit” to begin filing your claim.
Claims must be filed online or postmarked by February 5, 2024.
A final approval hearing is scheduled for February 9, 2024. The settlement website states that vouchers from the Shutterfly settlement will be made available to eligible class members if and when the court grants final approval to the deal and any appeals or objections are resolved. The site asks Shutterfly class members to be patient as the final stages of the settlement process roll on, as this may take “perhaps more than a year.”
The proposed class action detailed on this page was voluntarily dismissed without prejudice by the plaintiff on May 3, 2023 in light of the settlement.
In a March 9, 2023 joint status report, Shutterfly informed the court that, prior to the commencement of arbitration, the parties participated in two days of mediation, which, combined with subsequent discussions, yielded a “prospective settlement.” The court was informed in the same document that the parties “are continuing to finalize the terms and expect to execute a settlement agreement and release within the next 7-14 days.”
Attorneys stated that, as part of the settlement, they anticipated that the plaintiff would dismiss the case without prejudice and refile her claims in San Diego County Superior Court.
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A proposed class action claims that Shutterfly, LLC has violated a California law by advertising its products with false reference prices in order to give the impression that customers are receiving a discount.
The 26-page lawsuit says that although Shutterfly lists purported sale prices for items on its e-commerce website next to a strikethrough price, the photography company never sells items at these advertised “original” prices. The suit alleges that the defendant uses false strikethrough reference prices to artificially inflate the perceived value of its products.
As a result, consumers are induced into making purchases they otherwise would not have made and paying more than they otherwise would have paid, the case argues.
“Defendant’s scheme tricks consumers into justifiably believing they are getting a significant deal when in reality consumers are paying the usual retail price for products,” the complaint alleges.
The lawsuit claims that Shutterfly’s alleged scheme violates California law, which prohibits retailers from using outdated or false references to “original” prices.
According to the suit, sellers have long understood that consumers are “vulnerable to perceived bargains,” and that a reference price—i.e., the price at which a product was purportedly sold before being placed on sale—is used as a baseline on which a person perceives a certain product’s value. Thus, consumers are willing to pay more than they otherwise would for products they believe they are buying at a discount, the lawsuit relays.
The case alleges the defendant has used this consumer insight to its benefit by employing false reference pricing on Shutterfly.com. Per the suit, the prices for items on Shutterfly’s website are frequently listed next to a strikethrough price that falsely implies that the items are discounted. The case alleges, however, that these reference prices are merely an “illusion of short-lived bargains,” and that Shutterfly never actually sells the purportedly discounted items at the listed reference prices.
“The ‘original’ price merely serves as a false reference price Defendant uses as part of a larger scheme to deceptively manufacture false discounts to incentivize consumers to make purchases,” the complaint charges.
Per the suit, Shutterfly fails to disclose anywhere on its website that the reference prices are not former prices or prices at which identical products are sold elsewhere on the market.
According to the case, these reference prices create “a false sense of urgency” in consumers, who are allegedly deceived into buying more of and paying more for Shutterfly’s products as a result.
The lawsuit looks to cover anyone in the U.S. who, within the past four years, purchased from Shutterfly’s e-commerce website one or more products at a discount from an advertised reference price and who has not received a refund or credit for their purchase.
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