Shein Lawsuit Accuses Retailer of Using Fake Sales to Drive Purchases

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A proposed class action lawsuit claims that Shein has misled unsuspecting consumers by advertising on its website false “reference” or original prices for certain in-house-branded products that, in truth, were rarely, or likely never, sold at the stated reference prices, depriving shoppers of what they believed were genuine discounts.

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The 60-page Shein lawsuit contends that the company has reaped billions in revenue nationwide by offering purported sales that are “little more than deceptions” designed to entice consumers to buy house-brand items they believe are discounted from “illusory and misleading reference prices.” According to the suit, the Shein-branded, purportedly on-sale products and exclusives at issue “were rarely offered and likely never sold at the full reference price” in the recent past and are usually available for the supposedly discounted price.

By deploying false reference pricing online, Shein artificially drives up demand for Shein-branded products, “and by extension drives up their price,” the filing says.

“As a result, consumers receive Products worth less than the price paid,” the case summarizes.

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The allegations in the class action lawsuit stem from data collected by third-party tracking tools, including AliPrice.com and Microsoft Shopping’s price tracker. Across multiple clothing items tracked from eight Shein-exclusive brands, the case says, the products at issue were apparently sold at or near the discounted price during the prior six months and were “rarely, if ever” listed at higher reference prices.

For instance, the case highlights a sports bra sold under Shein’s GLOWMODE brand that was advertised with a reference price of $23.99 and a sale price of $19.19, accompanied by a “20%” off claim. However, the complaint says that, based on the tracking data, the item was consistently sold at or below the sale price for six months and never reached the original reference price.

Under California’s False Advertising Law, retailers are prohibited from advertising reference prices that were not the “prevailing market price” within the three months preceding the advertisement, the suit relays. Because Shein’s reference prices are rarely charged—or are charged for incredibly brief stints that do not constitute average pricing—the company has violated state and federal law prohibiting deceptive price comparisons, the lawsuit alleges.

The case cites research demonstrating the efficacy of deceptive pricing schemes employed by retailers like Shein, in that a higher reference price increases perceived value and consumers’ desire to purchase a product.

The Shein class action lawsuit looks to represent all individuals in the United States who purchased one or more items from US.Shein.com or the Shein mobile app at a discount from a higher advertised reference price during a period to be established by the court.

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