Lawsuit: Sears, JCPenney, Kohl’s & Macy’s Misled Consumers On Sale Prices

In recent years, a spate of retailers have been accused by customers of advertising “false” original prices on discounted or outlet merchandise in order to make consumers believe they are getting a steal of a deal. Now, the city of Los Angeles is joining the fray, suing JCPenney, Kohl’s, Sears, and Macy’s, alleging that in order to increase sales the companies used so-called “false reference pricing.” 

Los Angeles City Attorney Mike Feuer announced Thursday that he had filed lawsuits against the retailers for allegedly misleading customers about the true original price for products, making them believe they were getting a better price than they actually were.

According to the lawsuits against JCPenney [PDF], Kohl’s [PDF], Sears [PDF], and Macy’s [PDF], each retailer falsely claimed their merchandise previously sold at far higher “original,” “regular,” and “list” prices in order to create a false sense of value and to persuade customers to purchase the merchandise.

These misleading practices “play a major role in the companies’ overall making and business strategies,” the suits claim.

Under California law, retailers are prohibited from advertising an alleged former price of an item less the alleged former price was the prevailing market price within three months of the advertisement, or unless the date when the former price was in effect is clearly advertised.

To this end, the city claims that thousands of “sale” items were advertised at false reference prices.

For example, the city found that in Feb. 2016, JCPenney advertised on its website that a maternity swim top had an original price of $46, but was now on sale for $31.99 — an alleged 30% discount.

The city claims that the shown original price was a false reference point and that the top never sold for more than $31.99. Eventually, the company marked down the top to $21.99 and $14.99, while it continued to show an original price of $46.

At Kohl’s, the lawsuit claims the retailer offered Belted Cargo Shorts for the reduced price of $35.99 in Jan. 2016. This price was purportedly a discount from the original cost of $60. Investigators, however, found that the shorts were never posted for sale online for more than $35.99.

Kohl’s faced similar claims in a 2015 class action lawsuit. According to the new suit, the company continues to engage in misleading and deceptive pricing practices.

Macy’s — which has been on the receiving end of a similar lawsuit from shoppers in California and Florida — allegedly sold a Giani Bernini Large Cross Pendant Necklace in Sterling Silver” at an “original” price of $120 and a “sale” price of $30.

The city found that Macy’s never sold the necklace for more than $30.

In the case of Sears, the suit alleges the retailer advertised a Kenmore washing machine online for the regular price of $1,179.99 as on sale for $999.99 in April, despite the machine never selling for more than the purported sale price.

Over time, the investigators found that the device was sold for a series of different false discounts, including promoting the machine as on sale for $649.99 with a regular price of $1,179.99.

With the lawsuits, the city seeks to prohibit the companies from using false reference pricing practices, and a civil penalty of $2,500 for each violation.

“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.”