DO I HAVE A CLAIM IF I PURCHASED A PRODUCT FALSELY MARKETED AS “ON SALE”?

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Occasionally, consumers may purchase a product marketed as “on sale” with a marked-down sales price, only to later learn that the item they purchased was sold at its regular price.  Consumers may experience this when retailers use marketing techniques involving large signage, bright colors, all capitals (“SALE!  50% OFF!”), and strike-through language (“List: $199 Our price: $99”).  These marketing techniques may lead consumers to believe that they are getting a good deal when they are only getting the usual list price. 

In California, there are various state laws that may provide recourse when a consumer falls for deceptive marketing traps.  For example, key consumer protection statutes include California’s Legal Remedies Act (the “CLRA”), California Civil Code, §§ 1750-1784, as well as California’s False Advertising Law (the “FAL”), California Business and Professions Code, § 17500.  The CLRA is meant “to protect consumers against unfair and deceptive business practices and to provide efficient and economical procedures to secure such protection.”  Section 1770(a)(13) prohibits “making false or misleading statements of fact concerning reasons for, existence of, or amounts of, price reductions.” 

Additionally, the Section 17501 of the FAL states that no “price shall be advertised as a former price of any advertised thing, unless the alleged former price was the prevailing market price as above defined within three months next immediately preceding the publication of the advertisement or unless the date when the alleged former price did prevail is clearly, exactly and conspicuously stated in the advertisement.”

Allegations satisfying the CLRA and FAL may also meet the requirements of California’s Unfair Competition Law (“UCL”), set forth at California Business & Professions Code § 17200.  The UCL is a broadly drawn consumer statute that prohibits “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.”

The court’s decision in Hinojos v. Kohl’s Corp., 718 F.3d 1098 (9th Cir. 2013), as amended on denial of reh’g and reh’g en banc (July 8, 2013), shows how these statutes apply to protect California’s consumers against deceptive pricing.  In that case, a consumer brought a class action lawsuit, alleging that he “purchased several items that were advertised as being substantially reduced from their ‘original’ or ‘regular’ prices but that were, in reality, routinely sold by Kohl’s at the advertised ‘sale’ prices rather than the purported ‘original’ or ‘regular’ prices.”  The consumer further alleged that “the advertised ‘original’ or ‘regular’ prices did not reflect prevailing retail market prices during the three months immediately preceding the publication of the advertisements in question.”  In response, among other arguments, Kohl’s contended that the consumer did not actually suffer an injury.

The court first framed its findings in the following way: “retailers, well aware of consumers’ susceptibility to a bargain . . . have an incentive to lie to their customers by falsely claiming that their products have previously sold at a far high ‘original’ price in order to induce customers to purchase merchandise at a purportedly marked-down ‘sale’ price.  Because such practices are misleading—and effective—the California legislature has prohibited them.” 

The court then determined that “price advertisements matter” and thus held that “when a consumer purchases merchandise on the basis of false price information, and when the consumer alleges that he would not have made the purchase but for the misrepresentation, he has standing to sue under the UCL and FAL because he has suffered an economic injury.”  Further, the court found that the consumer “adequately allege[d] an injury under the CLRA” based on Kohl’s allegedly deceptive pricing.

Given California’s consumer statutes and numerous court decisions like Hinojos, consumers may have a claim against a company that has engaged in deceptive pricing.  Any consumer considering legal recourse should consult a qualified attorney who can evaluate the applicable laws, relevant legal developments, and specific facts of a given case.

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