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Spangenberg, Shibley & Liber, LLP | Dec 18, 2014

Bargain Hunters Beware

Categories: Articles

As shoppers pass by store windows, they often see signs that say “30% Off Everything!” But “everything” does not always mean everything. Many advertisements portray the message that all products in stores are on sale,” without indicating that the sale “applies only to certain products,” It is not until a consumer is actually in the checkout line, that they find out that not everything in their cart is on sale. Some buyers don't seem to mind. What they are after, especially in such a dreary economy, is the feeling they got a deal. However for other buyers, they feel tricked, manipulated and trapped – a victim of a less overt version of the old “bait and switch.”

Some consumers are now fighting back with class action lawsuits. Recently, a putative class action lawsuit against Banana Republic alleging this so-called “deceptive discounting.” was filed in state court in California. The suit and others like it allege that retailers seek to make customers feel smart and savvy for buying their sale items, however the merchandise is not always on sale and the stores are often just playing on the buyer’s emotions.

The Federal Trade Commission has commented that there are no specific Federal regulations dealing with fine-print disclosures for sales, such as the discloser of excluded items or categories of items from a broader sale advertisement. "But there is the general principle that the terms and conditions for the sale of any product or service must be clearly and conspicuously disclosed," Elizabeth Lordan of the FTC said. The Federal Trade Commission has rules on the books saying products have to be sold at regular price for a significant amount of time” before going on sale. However, that is sort of vague, and very tough to enforce. In California, where class action lawsuits related to sale price advertising are currently pending against Kohl's, Jos. A. Bank and J.C. Penney the law states that stores must sell items at the 'prevailing market price' for at least three months before putting it on sale.

Only time will tell whether the recent spate of class action suits related to sale pricing and exclusion will lead to meaningful change in the retail industry, but until then and as the holiday shopping season approached, the usual caveat “buyer beware” is definitely still sound advice.