Big Name Stores Accused of Fake Discounts

If you see a price that’s too good to be true, it probably is. And, it might be against the law, too. Los Angeles City Attorney Mike Feuer is suing retailers Kohl’s, Macy’s, JCPenney and Sears over their pricing gimmicks. The lawsuits allege that pricing schemes violate California’s price comparison laws. He alleges that these fake discounts are tricking the American population.

“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 news release.

Deep discounts?

fake discounts - kohls cargo shorts
Sources: Wikimedia Commons, Pixabay

The price comparison law prohibits retailers from advertising a price of an item unless it was actually sold at that price within the last three months. If it’s been longer than three months, the retailer needs to to be clear about when the item was last sold at its “original” price.

For example, the lawsuit against Sears alleges it advertised a front-load washer with a false original price of $1,179.99. In actuality, the store never sold the washer for more than $999.99 over the course of six months.

At Kohl’s, a pair of men’s cargo shorts carried an original price of $60. However, they  never sold for more than $35.99. They were also on “sale” for as low as $18, Feuer alleges. That’s a surefire way to put a 70% OFF tag on the product!

Financial consequences of Fake Discounts

Feuer is seeking legal injunctions to stop the retailers from continuing to advertise false original prices, along with a penalty of up to $2,500 for each documented violation of the law. This could add up quickly and equate to a serious financial burden for these stores.

The lawsuits claim that a store impacts consumer behavior by artificially inflating the original price of its items. Doing so makes customers feel like they are getting a bigger bargain than they actually are. Setting false prices also impacts competition among stores. It gives an unfair advantage to those who set inflated prices over those who set more realistic ones.

The accusations against Kohl’s and JCPenney come not long after each settled separate class-action suits in California around similar claims. JCPenney settled for $50 million in 2015, and Kohl’s settled for $61.5 million earlier this year.

Furer is no stranger to legal battles against large corporations. He previously took on Wells Fargo and secured a $50 million settlement from the company in September over allegations it opened unauthorized bank accounts for its customers.