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Retailers Allegedly Mislead About List Prices to Overcharge Consumers Leading to Consumer Fraud Cases in California

Everyone loves a good deal and retailers know that. It is extremely popular to see online retailers include a price for an item that is higher than the price they’re selling it for. Names for the higher price range from “suggested retail price” to “list price” to the more vague “estimated value”. By listing a higher price next to their own price, the retailers give the impression that they’re giving their customers a deal, but how do customers really know they’re getting a deal?

Many customers simply take the retailer’s word for it while others take the age-old advice for customers to do their research, shop around, and compare prices. Recent comparisons of “discounted” items on sites like Amazon and Overstock.com failed to find any retailer that sold the item for the list price. Comparisons also found that the “list price” varied from site to site, even when the actual price it was sold for was the same at each retailer.

Because giving customers the impression they’re getting a deal can make them more likely to click that “Buy” button, many customers feel deceived when they find out they paid the same price as everyone else at other retailers. This sense of betrayal has resulted in several consumer class action lawsuits with allegations of false advertising.

One such consumer lawsuit against Overstock.com in California resulted in a $6.8 million fine against the online retailer. The company’s argument was that it was simply following business practices common to the industry when it came up with its reference prices. More recently, a proposed class action lawsuit was just filed against Wayfair for advertising discounts on their items, even when there was no evidence they had ever sold those items at a higher price.

Amazon was also sued in 2014 by two customers who alleged the retail giant’s list prices bore no similarity to prevailing market prices at the time. That lawsuit was dismissed due to an arbitration agreement, but online retailers aren’t the only ones accused of using list prices to tempt their customers into making a purchase.

Brick-and-mortar stores also have a long history of displaying inflated list prices to make their “sale” prices look like a deal. J.C. Penny recently paid $50 million to settle a consumer class action lawsuit for using that practice, and Kohl’s has faced similar allegations in the past.

Some Internet retailers, such as Amazon, include disclosures that state the “list price” could be anything from the manufacturer’s suggested price, to the site’s own guess as to what the item is worth, but that’s not sufficient for the Federal Trade Commission (FTC).

According to the FTC, a higher list price can mislead customers if it does not correspond to prices used by a substantial number of retailers. If a retailer gives a list price higher than what they’re selling the item for, but their “sale” price is the same price every retailer is selling that item for, then the FTC considers the list price to be a lie. The FTC further stated that it is a serious problem if retailers are doing this frequently, which is exactly what they appear to be doing.

Our Plainfield, Illinois consumer rights private law firm handles individual and class action gift card, data breach, privacy rights, deceptive advertising, predatory lending, unfair debt collection, lemon law and other consumer fraud cases that government agencies and public interest law firms such as the Illinois Attorney General may not pursue. Class action lawsuits our law firm has been involved in or spear-headed have led to substantial awards totalling over a million dollars to organizations including the National Association of Consumer Advocatesthe National Consumer Law Center, and local law school consumer programs. The Chicago consumer lawyers at DiTommaso-Lubin are proud of our achievements in assisting national and local consumer rights organizations obtain the funds needed to ensure that consumers are protected and informed of their rights. By standing up to consumer fraud and consumer rip-offs, and in the right case filing consumer protection lawsuits and class-actions you too can help ensure that other consumers’ rights are protected from consumer rip-offs and unscrupulous or dishonest practices.

Our Lisle, Geneva and Wheaton consumer attorneys provide assistance in data breach, privacy violation, fair debt collection, consumer fraud and consumer rights cases including in Illinois and throughout the country. You can click here to see a description of the some of the many individual and class-action consumer cases our Chicago consumer lawyers have handled. A video of our lawsuit which helped ensure more fan friendly security at Wrigley Field can be found here. You can contact one of our Oswego and Yorkville consumer protection, gift card and data breach attorneys who can assist in consumer fraud, consumer rip-off, lemon law, unfair debt collection, predatory lending, wage claims, unpaid overtime and other consumer, or consumer class action cases by filling out the contact form at the side of this blog or by clicking here.  You can also call our toll free number at (877) 990-4990.