KSG Investigation: Retail Outlets Deflate Bargain Hunters by Inflating Purported Savings

 Ralph Lauren is the latest retailer to be hit with accusations of deceptive pricing.  A lawsuit filed on May 2, 2016, in the Southern District of California, alleges that the retail giant falsely advertised “’market prices and corresponding ‘phantom’ savings”.

 It is the latest in a string of class action lawsuits aimed at outlet and discount stores and websites that list false advertised retail prices (ARPs) next to their sales prices. This practice tricks consumers into believing that they are purchasing items at a discount. Most of these “market” prices are nothing more than imaginary figures without any basis in economic reality.

 This violates California law, where many of these lawsuits have been filed. The state’s stringent law requires ARPs to be the prevailing retail price of a product in the immediately preceding ninety days. In the aforementioned Ralph Lauren case, the company violated this law by peppering its store with “40% discount signs!” and high ARPS, despite the fact that the items in question had only even been for sale in the outlet stores.  

 The boom of deceptive pricing lawsuits, can be traced back to 2014. That year, a federal judge awarded almost seven million dollars to the people of California in a deceptive advertising lawsuit against Overstock.com . In January 2014, four members of Congress urged the Federal Trade Commission to take a closer look at the advertising and pricing of outlet stores. They suggested that outlet stores were violating the FTC’s Guides Against Deceptive Pricing by “advertising a retail price alongside…store price…since the item was never sold in the regular retail store…the retail price is impossible to substantiate”. The lawmakers called for the FTC to investigate outlet stores’ marketing practices and consider standardizing the definition of an outlet store.

 This letter coupled with the Overstock.com decision captured the attention of consumers and attorneys nationwide, sparking the dozens of lawsuits that have since been filed. It seems that without intervention from the FTC or other agencies, the number of suits will only continue to increase.

If you, or someone you know, has purchased items at an outlet store with false advertised reference prices, we would like to hear from you. Please contact us with your story to aid us in our investigation.

Kohn, Swift & Graf is a national leader in class actions, including complex consumer litigation.  With experienced attorneys and a competent support staff, our firm strives to provide the highest quality of service to our clients.  We treat each case with careful attention to ensure that consumers get the justice they deserve.  KSG is centrally located in Philadelphia, PA.

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