Consumer lawsuits, including class action lawsuits, alleging deceptive pricing have been growing in number nationwide. Lawyers are representing an increasing number of consumers who have fallen victim to deceptive pricing, while states are enforcing their consumer protection laws against retailers who engage in deceptive pricing.
A recent example of such state consumer law enforcement is an agreement reached between Virginia’s Attorney General (AG) and Hobby Lobby in a deceptive pricing enforcement action by Virginia’s AG. Virginia’s AG argued that Hobby Lobby “routinely” advertised discounts compared to “other sellers” but did not disclose what its prices were actually being compared to, as required by Virginia state law.
Hobby Lobby was ordered to pay the state of Virginia an $8000 penalty, and the Court ordered a permanent injunction against Hobby Lobby prohibiting the company from any future violations of Virginia’s Comparison Price Advertising Act.
Taylor v. Nike, Inc, is a deceptive pricing case with a very different result. Nike won this deceptive practices lawsuit filed in Oregon federal court by a lawyer representing a consumer plaintiff who alleged that Nike engaged in deceptive pricing.
The plaintiff claimed that Nike outlet stores violated California consumer protection law when it used fictional “suggested retail” prices that are higher than the items’ actual prices to scam consumers into thinking they are getting a bargain. The store used tags with two prices: a “Sugg. Retail Price” and a lower “Our Price.” The plaintiff’s lawyer claimed that this deceptive pricing practice led the plaintiff to believe that the items with tags were discounted.
Nike filed a motion to dismiss the deceptive pricing lawsuit, and the federal court judge granted Nike’s motion to dismiss. The Court found that the plaintiff failed to state her claims with sufficient specificity; and it was “unclear ...what exactly the plaintiff was alleging.” This lack of clarity led the Court to dismiss plaintiff’s allegations of fraud. The court order eliminated Nike’s liability based on its outlet store’s pricing model.
Nike and Hobby Lobby are just two of many retailers that have been targeted by deceptive pricing lawsuits in California and other states nationwide. Kohl’s is another.
A deceptive pricing class action lawsuit against Kohl's Department Stores in California resulted in a settlement agreement of $6.5 million. Two consumer plaintiffs alleged that they purchased products from Kohl's multiple times. The items t featured two prices: a selling price and a significantly higher price represented to be the item's "regular" or "original" price. The complaint charged that Kohl's led consumers to believe that they were receiving a substantial discount by simultaneously displaying the two prices.
The plaintiffs claimed the higher amount was a false price and not the true regular or original price for Kohl's merchandise. It was also not the prevailing market retail price in the three months preceding the company’s advertisement, which violated California law.
A Federal Court denied Kohl's motion to dismiss the lawsuit, and granted the plaintiffs' motion for class certification. The parties’ settlement included monetary and injunctive relief.
This blog has presented just three examples of enforcement actions against retailers for deceptive pricing. As other retailers continue their illegal deceptive pricing practices, consumers, their lawyers, and state agencies will continue to fight against these unlawful retail pricing practices. State enforcement and consumer class action lawsuits will be filed in California and across the country. These enforcement actions will force unscrupulous retailers to ‘pay the price’ for engaging in unlawful deceptive pricing.
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