Last Friday, the Los Angeles City attorney's office brought suit against four major retailers alleging that the retailers were offering discounts on products that never sold at the advertised retail price. These types of cases were en vogue about 10 years ago and, since then, a number of states have passed or enhanced their regulations that set forth rules as to when a retailer may offer a reference price when providing a sale price.
In essence, each of these cases alleges that the retailers are utilizing fictitious former pricing comparisons to lure consumers into believing that they are receiving a substantial discount when, in fact, the product never sold at the price offered. In 2013, the 9th Circuit held that a consumer suffers an economic injury and has standing to sue if he alleges that he would not have bought the product but for the false price information. This decision contrasts with other rulings around the country involving similar facts. For example, both Illinois and Florida courts, in reviewing similar state consumer statutes, have ruled that a consumer must show actual damage before proceeding with litigation. In both instances, the Court dismissed the matter in favor of the merchant.
For multi-state retailers, they should be knowledgeable about state-specific ordinances and regulations, as nuances exist that may require changes to existing advertising practices.