Do you ever go into a clothing retailer and feel like most of the clothes are always “on sale” with prices marked down dramatically from the “regular price”? So much so that it seems as though some of those clothes were never really at the regular price to begin with, making the sale price basically the regular price and the suggestion that they are “on sale” at least slightly misleading?

If you answered “yes,” you are not alone, and a number of retailers are now being sued over what some consumers are calling misleading pricing on apparel. J. Crew is the latest clothing retailer to be sued, and specifically with regard to its “factory store” website. The complaint filed against J. Crew argues that the retailer, “engaged in a systematic scheme of false and misleading advertising, marketing, and sales practices with respect to the sale of apparel and other personal items via their online J. Crew Factory store website.”

J. Crew’s Allegedly Misleading Sales Prices

The plaintiff suing J. Crew made the following three central factual allegations in support of his claims that J. Crew violated the law:

  • J. Crew had a policy of setting an arbitrary “valued at” price for every item offered for sale on their website, which purported to be the item’s “original” or “regular” price, despite never offering the clothing at that price.
  • J. Crew purported to have limited time “sales” in which clothes were sold at a certain discount from their regular price on a site-wide basis, yet these sale events were misleading as the clothes were never sold at their regular price.J. Crew purported “limited time” sales were misleading, because “each sale is immediately followed by another similar sale, which results in the same or a very similar ‘discounted’ price for each item on Defendants’ website.”

Based on these factual allegations, the plaintiff is attempting to certify a class action in district court, arguing that the retailer is liable for violations of state and federal law regarding misleading sales tactics.

Federal Law Prohibits Use of Artificial “Regular Prices”

While many people might assume that using a stated regular price that is never actually used as a regular price is simply a time-honored (if annoying) sales tactic, it is actually directly violative of federal law. So-called “phantom” or fictitious regular prices violate federal statute 16 CFR 233.1, which states, in part (emphasis added):

Where the former price is genuine, the bargain being advertised is a true one. If, on the other hand, the former price being advertised is not bona fide but fictitious—for example, where an artificial, inflated price was established for the purpose of enabling the subsequent offer of a large reduction—the “bargain” being advertised is a false one; the purchaser is not receiving the unusual value he expects. In such a case, the “reduced” price is, in reality, probably just the seller’s regular price.

Fictitious sales pricing practices are also prohibited under numerous state consumer protection laws as well.
Other Retailers Under the Gun for False Pricing

J. Crew is only the latest retailer to be sued for misleading sales prices. Last year in California, consumers sued T.J. Maxx after discovering that the full retail price listed on the store’s items were not actual prices but simply “estimates” that the retailer’s staff came up with when pricing the items. Another discount chain, DSW, was also sued last year by retailers over misleading discount pricing statements.

The complex litigation attorneys at McCuneWright have experience in investigating consumer fraud and bringing litigation to obtain justice for defrauded consumers. If you suspect misleading sales tactics, please contact McCuneWright, LLP today to find out your legal options.