Los Angeles City Attorney Mike Feuer Sues Four Major National Retailers, Alleging False Reference Pricing; J.C. Penney, Kohl’s, Macy’s and Sears Allegedly Misled Customers With Pricing Schemes to Increase Sales

December 8, 2016

LOS ANGELES – With consumers across the nation striving to get the most for their holiday shopping dollar, Los Angeles City Attorney Mike Feuer today announced that his office has sued national retail giants J.C. Penney, Sears, Kohl’s and Macy’s, alleging that to increase sales, each of the companies used “false reference pricing” schemes to mislead customers into believing items were being sold at significant discounts.

 

“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,” said Feuer. “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.”

 

Four separate lawsuits name as defendants: J.C. Penney Corporation, Inc., Kohl’s Department Stores, Inc., Macy’s, Inc., and Sears Holdings Management Corporation and Sears, Roebuck & Co. (Click on each to read the complaint). These lawsuits allege the defendant retailers employ “false reference pricing” by falsely claiming their merchandise previously sold at far higher “Original,” “Regular,” or “List” prices in order to create a false sense of value and to persuade customers to purchase the merchandise at an allegedly reduced “sale” price.  The lawsuits allege that misleading and deceptive false price advertising schemes play a major role in the companies’ overall marketing and business strategies. 

 

Under California Law, retailers are not permitted to advertise an alleged former price of an item unless the alleged former price was the prevailing market price within three months of the advertisement, or unless the date when the alleged former price did prevail is clearly, exactly and conspicuously stated in the advertisement.  The lawsuits allege that thousands of “sale” items were advertised at false reference prices. 

 

The lawsuits cite multiple alleged examples, including:

 

• In February, 2016, J.C. Penney’s website allegedly first advertised a maternity swim top with an “original” price of $46 and a “sale” price of $31.99, an alleged 30% discount.  However, the purported “original” price of $46 allegedly was a false reference price.  J.C. Penney allegedly did not offer the item for sale online for any more than $31.99.  

 

• In January, 2016, Kohl’s allegedly first offered for online sale Belted Cargo Shorts, an exclusive in-house product, for a reduced price of $35.99 from an “original” price of $60.  However, the purported “original” price of $60 allegedly was a false reference price.  Kohl’s allegedly did not offer the item for sale online for more than $35.99, even though the website consistently showed a purported “original” price of $60 for the item.       

 

• In May, 2016, Macy’s allegedly first offered for sale online a “Giani Bernini Large Cross Pendant Necklace in Sterling Silver,” with an “original” price of $120 and a “sale” price of $30.  However, the purported “original” price of $120 allegedly was a false reference price.  Macy’s allegedly did not offer the item for sale online for more than $30, even though the item allegedly was consistently advertised with a purported “original” price of $120.

 

• In April, 2016, Sears allegedly first advertised online a Kenmore washing machine with a “regular” price of $1,179.99 and a “sale” price of $999.99.  However, the purported “regular” price of $1,179.99 allegedly was a false reference price.  Sears allegedly did not offer the item for sale online for more than $999.99, even though the website allegedly consistently showed a purported “regular” price of $1,179.99 for the item.  

 

Both J.C. Penney and Kohl’s were previously the subject of class action lawsuits alleging similar deceptive business practices. In November, 2015 and April, 2016, JC Penney and Kohl’s respectively represented to the United States District Court in Los Angeles in separate matters that they agreed not engage in the practice. Despite these representations, the companies allegedly continue to engage in misleading and deceptive pricing practices. 

 

The City Attorney’s lawsuits seek injunctions prohibiting the defendants from further use of false reference pricing business practices.  The lawsuits also seek civil penalties up to $2,500 for each violation. 

 

Chief Deputy Jim Clark, Chief Assistant City Attorney Thomas Peters, Assistant City Attorney Michael Bostrom, and Deputy City Attorneys Jennifer Lam and Steven Son are handling the litigation.

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The Office of Mike Feuer

Los Angeles City Attorney

James K. Hahn City Hall East, Suite 800

Los Angeles, CA 90012 | 213-978-8100