Pricing and Timing

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Over the past few years, a number of retailers have been challenged over their promotional pricing practices. Those challenges have been brought, primarily, by plaintiffs’ attorneys in class action suits and, occasionally, by regulators. This month, though, NAD issued a decision in a challenge that was brought by a company’s competitor.

According to the challenger…

A bench trial began this week to resolve allegations by the FTC that DirecTV misled millions of consumers about the actual costs of its subscriptions.  According to the FTC, DirecTV should be required to pay $3.95 billion dollars to compensate consumers for failing to disclose that it would raise its monthly subscription price after a…

On August 2, 2017, the U.S. District Court for the Central District of California dismissed a putative class action lawsuit against Ross Stores that accused the discount retailer of misleading promotional pricing practices. The lawsuit stemmed from February and May 2015 purchases by the two lead plaintiffs of items bearing price tags with a selling…

Yesterday, the Virginia Attorney General announced that it reached a settlement with Hobby Lobby over the retailer’s price comparisons. According to the press release, Hobby Lobby advertised discounts compared to “other sellers,” but failed to disclose the basis of comparison, thus making it difficult for consumers to determine whether they were getting a good deal.…

Class action plaintiffs continue to explore new theories under state promotional pricing statutes. Last week, a plaintiff filed a class action complaint against Gap Inc. in California state court, alleging that the company violates several state laws by not adequately disclosing which products are excluded from an advertised sale. As a result, consumers make a…

Last Thursday, four members of Congress sent a letter to the FTC Chairwoman expressing concerns that consumers are being deceived by pricing at outlet stores and asking the FTC to investigate potential violations of Section 5 of the FTC Act and the FTC’s Guides Against Deceptive Pricing. They noted that, unlike the historical practice…

In the Overstock.com case described in the post yesterday, the plaintiff also argued that Overstock’s representations that shipping was “free” or “only $2.95” violated California’s False Advertising Law because the company factored the full cost of shipping into the underlying product price. The court ruled in Overstock’s favor, determining that the claim was “nonsensical,”…

Still recovering from the holiday sales? If you’re a retailer or a manufacturer pricing your own products, don’t forget about the state laws governing promotional pricing and deceptive pricing claims. The state of California certainly hasn’t – on Friday, a California judge issued an almost $6.82 million civil penalty against Overstock.com via a tentative ruling and proposed statement of decision regarding the company’s comparative price advertising. The court also imposed stringent injunctive provisions regarding comparative price advertising. Yesterday, Overstock announced that it will appeal.

The complaint alleged that Overstock made false and misleading price comparisons to products’ “advertised retail price” (“ARP”), in violation of California’s False Advertising Law and Unfair Competition Law. Specifically, the state alleged that Overstock exaggerated the Overstock discount by referencing the highest price found for the ARP or constructing an ARP using a formula that applied an arbitrary multiplier to Overstock’s wholesale cost. Additionally, the company allegedly failed to disclose that some ARPs were based on the retail price of a similar, but non-identical, product. The court concluded that comparisons to ARPs identified as “list prices” and based on a formula or the price of a different, non-identical product were false and misleading representations, and every such ARP was an untrue statement because those ARPs did not actually exist. The court dismissed Overstock’s argument that its pricing strategy caused no consumer harm because customers always received the lowest price available on the internet, ruling that harm is presumed when an ad is demonstrated to be false, deceptive, or misleading.

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For marketers facing challenges to their promotional pricing strategies, a new ruling could bolster their defenses.  Earlier this week, a federal judge in New Jersey granted Jos. A. Bank’s Motion to Dismiss in a proposed class action alleging deceptive pricing.  The judge ruled that the plaintiffs failed to show specific unlawful conduct or actual loss…

We’ve posted several entries about lawsuits involving continuous sales and promotional pricing. (Click here and here, for examples.) This week, the NAD announced a decision involving similar issues.

Lowes frequently advertises “10% Off Major Appliances” and includes an expiration date on the offers. The Home Depot argued that, despite the expiration date, Lowes promoted…