Burlington Coat Factory agreed to pay $27.5 million to settle a deceptive pricing suit filed in California federal court.
Reflecting the current trend of consumer class actions challenging the advertising for discount pricing, James Horosny asserted that the national retailer misled consumers with the use of “Compare at” reference prices in relation to an “Our Low” price point. The price tags tricked consumers into believing they were receiving a bargain price for the same merchandise sold at higher prices by other retailers, the plaintiff alleged.
The complaint alleged Burlington violated various state laws as well as the Federal Trade Commission Act.
After the court denied the defendant’s motion to dismiss, the parties reached an agreement. An estimated 3.7 million class members—defined as those who purchased one or more product(s) that were advertised with a “Compare at” price and an “Our Low” price between July 1, 2011, and January 26, 2017, at a California store or shipped to a California address—will each receive a $7.50 merchandise credit.
Class members are entitled to receive only one merchandise credit regardless of the number of alleged violations, and the credits may be redeemed only for in-store purchases in California or online purchases. The credits, which do not expire, may also be redeemed for $5 cash.
On top of the merchandise credits, the settlement fund provides for $10,000 in plaintiff incentive fees, up to $927,500 in attorneys’ fees and costs, and up to $1,137,000 in claims administration fees.
In addition to the monetary payout, Burlington agreed to post disclosures about the basis for its “Compare at” pricing practices both in stores and on its website, hold at least one training for its buyers to review pricing practices, and conduct an audit of its pricing practices for goods sold in its California stores.
To read the settlement agreement in Horosny v. Burlington Coat Factory of California, LLC, click here.
Why it matters: Deceptive pricing suits are the hot new trend in consumer class actions, and the sizable deal in the Burlington case will certainly not discourage plaintiffs from bringing more lawsuits.