Nutrition company joins a topflight roster of retailers suffering the phantom menace

Sale Fail

General Nutrition Centers is like the Gap of vitamin and supplement retailers: It’s everywhere. The chain has about 8,000 locations, nearly 6,000 of which are in the United States. The sheer number of products it sells are impossible to count. It’s a behemoth.

But a lone pair of consumers accused the personal-care giant of playing fast and loose with its pricing. In May 2016, Ashley Gennock and Daniel Styslinger launched a suit against GNC claiming that it violated the Pennsylvania Unfair Trade Practices and Consumer Protection Law (along with similar laws in dozens of states) and the Federal Trade Commission Act. The suit, filed in the Western District of Pennsylvania, maintained that the company’s website listed sales prices alongside false regular prices. This practice, known as a “phantom markdown,” presented consumers with falsely inflated discount figures.

“Defendants’ pricing information regarding its ‘on sale’ products is false, misleading and deceptive,” declared the complaint, “because the ‘sale’ price is the same as, or above, the products’ actual market and/or former price, and the ‘regular’ price is a false price at which the product was never sold. Indeed, many, if not all of the ‘on sale’ products located on Defendants’ Website have never been sold at their ‘regular’ price.”

The Takeaway

Negotiations between the class and GNC began in late 2017, and an amended complaint swept up several other cases into a single joint action in June of this year. A settlement was finally struck a few weeks ago.

Under the agreement, GNC will fork over $6 million; customers who file can receive $5 in cash or $15 transferable credit toward online purchases with no expiration date, as well as other credits and discounts. Of that total, $1.5 million covers attorneys’ fees. Given GNC’s profile and footprint, it’s no surprise that the class is big – 3.6 million members. The settlement also requires GNC to take reasonable steps to ensure its comparative discount advertising on its website complies with the law.

Phantom markdown cases – virtual or IRL – have experienced an upswing in recent years. We’ve written about cases involving Kate Spade and J. Crew, and other famous names that have been drawn into similar suits.