Deceptive discount lawsuits: what they say about fake sale prices

Many stores show two prices on a tag or web page: a higher "regular," "was" or "compare at" price, often crossed out, and a lower price you pay. The higher number is called a reference price. It tells the shopper how much they are supposedly saving.

Companies use reference prices because a visible discount can make a deal look more attractive and encourage people to buy now. Reference prices are common in outlet stores and in online sales that seem to run all the time.

The Federal Trade Commission has published guidance on this practice. According to the FTC Guides Against Deceptive Pricing (16 CFR Part 233), comparing a sale price to a former price is generally fine when the item was actually offered at that former price openly and in good faith for a reasonably substantial period. The same guides describe a made-up or inflated former price, used only to make a reduction look bigger, as deceptive.

The lawsuits on this page make claims along those lines. The Michael Kors discounted merchandise lawsuit says outlet items were advertised as marked down from inflated reference prices. The Leesa, Brooklyn Bedding, Helix and Bear mattress case says those companies advertised fake discounts on mattresses sold to California shoppers. The Ann Taylor Factory Stores and Loft Outlet lawsuit says those outlets advertised improper or deceptive discount pricing.