Why Your Holiday Shopping Discounts Could Be a Mirage
A Southern California Macy's
Four major retailers aren't always giving you discounts when they advertise that a price has been slashed. They just might be marketing a lie. That, at least, is the gist of allegations unveiled this week by Los Angeles city attorney Mike Feuer, who claimed that discounts advertised by Sears, Kohl's, J.C. Penney and Macy's earlier this year were mirages based on higher prices that never really existed.
"We are calling on Sears, Kohl's, J.C. Penney and Macy's to stop what we allege are deceptive pricing schemes immediately," Feuer said via Twitter.
His office filed lawsuits against each retailer alleging they're violating state law that prohibits "false reference pricing." Essentially, stores can't claim a discount from a higher price that wasn't ever in effect. That benchmark has to be a "prevailing market price" within three months of the discount. Retailers can also satisfy the law by indicating exactly when a higher price was in effect.
City prosecutors say these retailers weren't following the rules. "The lawsuits allege that misleading and deceptive false price advertising schemes play a major role in the companies’ overall marketing and business strategies," according to a city attorney's statement.
The suits were based on examples such as this, according to prosecutors:
In February, J.C. Penney’s website advertised a 30 percent discount on a maternity swim top said to have listed originally for $46. But the new price of $31.99 was the maximum figure ever advertised on the site, the suit against that retailer alleges.
In January, Kohl's allegedly peddled cargo shorts online for a discounted price of $35.99, a plunge from a published original price of $60. But, again, you couldn't buy them for more than $35.99 at any time, the city attorney's office alleged.
In May, Macy's advertised a sterling silver necklace online for $30, a huge break from a claimed original price of $120, prosecutors said. But $30 was the price all along, they claimed.
And in April, Sears advertised a Kenmore washing machine for $999, a nice break compared with the claimed $1,179.99 original price, prosecutors said. "Sears allegedly did not offer the item for sale online for more than $999.99," according to the city attorney's statement.
What's more, after facing class action suits with similar allegations last year, J.C. Penney and Kohl’s agreed in a U.S. District Court to put a stop to fake discounts, prosecutors said.
"Customers have the right to be told the truth about the prices they’re paying — and to know if a bargain is really a bargain," Feuer said in a statement. "My office will fight to hold retailers responsible for their practices and to ensure consumers can make informed choices when spending their hard-earned money."
The suits essentially ask that a judge order the retailers to stop using false benchmarks for their price reductions. The city also wants civil penalties of as much as $2,500 per verified violation.
Representatives of Sears, J.C. Penney and Macy's said they would not comment on active or pending lawsuits. We did not hear back from Kohl's.