It has become increasingly common for consumers to join California deceptive pricing class action lawsuits against retailers that market and sell products with deceptive pricing information. California’s false advertising law is often used as the basis for consumer class action litigation concerning false reference pricing because the state law is favorable to consumers. In recent years, there have been a number of class action suits filed in state court as consumers sued major retailers because of misleading pricing. Some of these cases settled, with the retail company agreeing to change their sales policies and paying out large settlement amounts to consumers. If you bought an item because of a comparison price in an advertisement, the Los Angeles consumer protection attorneys at Tauler Smith LLP can help you.
Keep reading this blog to learn more about California consumer class action lawsuits alleging deceptive pricing by retailers.
Reference Pricing Is a Tool Used by Retailers to Generate Sales
A comparison price, reference price, or strikethrough price might refer to the full price at which the retailer previously sold the product, the list price at which another seller currently offers the product, or the Manufacturer Suggested Retail Price (MSRP) of the product. Retail companies often rely on reference pricing as a marketing strategy to entice customers to make purchases by emphasizing that the ticket price represents a significant discount over full price. The idea is that the customer will see a sales price next to a higher regular price and be more likely to buy the item because it is on sale. This is commonly known as comparison pricing or strikethrough pricing (because the original price may have a line through it), and it can be an effective tool to increase sales revenues.
The general idea behind comparison pricing laws regulating these advertising strategies is that retailers should be transparent about the pricing of their products, including older prices that have been discounted for current sales. Common examples of unlawful comparison pricing include the following:
- The retail company includes a former price in an advertisement even though the item was never offered at that price.
- The company mentions a former price that was used in the distant past and is therefore no longer relevant. (Under the law, this may be allowed if the ad discloses when the former price was used.)
- The retailer references a former price that was not used in the regular course of business.
- The company uses a former price that may have been available to some customers but that was not openly offered to the public.
- The retail company artificially inflates the initial price of an item just so that they can later reduce the price and misleadingly call it a “sale.”
Jurisdiction in Deceptive Pricing Class Action Lawsuits
The jurisdiction matters a great deal when bringing consumer litigation. For example, California’s law is more plaintiff-friendly than other states, with California courts often finding in favor of plaintiffs who file legal claims alleging false reference pricing. There is also a reduced standard for establishing economic injury in California cases, since the plaintiff merely needs to show that the former pricing representations were misleading and that the false information is what prompted the purchase.
It is also possible for consumers to file a federal comparison pricing claim. Federal Trade Commission (FTC) guidelines prohibit retailers from deceptive sale pricing that uses inflated former prices as a point of comparison. For example, companies are not allowed to artificially inflate the price of a product for a short period of time just so that they can later reduce the price and then claim that the product is “on sale.” In false advertising and unfair competition cases, a federal court may look to the intent of the business to determine whether the initial price was set high solely for the purpose of later offering a large discount. Evidence of this unlawful intent could be that the retailer immediately reduced the inflated price and did not maintain it for a reasonable amount of time.
Winning Your California Comparison Pricing Class Action
False advertising claims involving deceptive pricing information are often filed as class action lawsuits in California. That’s because the plaintiffs are typically consumers who made a single purchase of a discounted retail item. The good news is that when you join other consumers in a comparison price class action, you are more likely to get the benefit of experienced legal counsel that can help you and all the other plaintiffs get reimbursed for the difference in value from your purchase, as well as statutory damages.
Certifying the Class
A knowledgeable California consumer fraud lawyer can make sure that you meet the requirements of a class action suit, which include establishing commonality among all plaintiffs through similar questions of fact and law. For example, your attorney may be able to get the class of plaintiffs certified by showing that all class members were victimized by the retailer’s sales price misrepresentations and that the same deceptive advertisement with false former prices was used in all instances.
In a California comparison pricing class action, it might also be easier for additional members of the class to gain standing to sue. That’s because at least one California appellate court held, in Branca v. Nordstrom, Inc., that the class members in retail pricing cases do not necessarily need to have purchased the same retail items as the named plaintiff. Rather, all that is needed for the additional individuals to join the class action suit is proof that they purchased items advertised with a comparison price.
The Discovery Process
One major advantage to filing a class action consumer lawsuit in retail discount pricing litigation is that the defendant will be subject to discovery during the class certification process, and discovery could produce significant evidence of wrongdoing. In order to certify the class, the plaintiffs’ attorney must show that there are common questions of law or fact among the plaintiffs and that those common questions predominate over any individual issues in the case. Since the discovery process allows the plaintiffs’ attorney to request documents from the defendant, this is an opportunity to potentially press the retailer for emails, price reports, and other internal documents that the retailer might not want exposed.
Depending on the type of information that is turned over during discovery, the plaintiffs may have strong evidence that the retailer violated consumer protection laws and intentionally misled consumers with deceptive comparison prices.
Damages & Financial Compensation Available in California Strikethrough Pricing Cases
The damages that might be available to plaintiffs in California strikethrough price cases include both compensatory damages and statutory damages. This gives consumers a lot of leverage against a retail company that violates state or federal promotional pricing guidelines by using fraudulent advertising practices. Moreover, when the retailer engaged in willful violations of the law, they may be subject to treble damages that can triple the compensatory damages available in the case.
Contact the California Consumer Class Action Lawyers at Tauler Smith LLP
Tauler Smith is a Los Angeles law firm that represents plaintiffs in consumer class action litigation in California and across the U.S. If you bought a retail item because the retailer used deceptive advertising, you should contact our legal team today.