What’s the News?

A recent lawsuit filed against GNC serves as a reminder that companies need to ensure that prices listed as “regular prices” are substantiated.

Background on the Case

The complaint in a class action recently filed against the nutrition and supplements retailer alleges that GNC deceptively lists items on its website as having a deceptive “regular price” and a substantially lower “sales price.” The regular price is either marked down or grayed out in a manner that makes customers believe the sales price is a substantial discount over the price that the items were formerly sold for (see below for an example of the markdowns contained in the complaint).

The complaint claims that these markdowns are deceptive because the listed regular price is not:

  • A bona fide price at which GNC offered the product in recent months; or
  • A prevailing market price within the preceding three months prior to publication of the price.

The complaint alleges that the pricing scheme violates guidance from the Federal Trade Commission and a California law that sets standards for former price advertisements.

What’s the Takeaway?

This case follows a series of other pending cases filed against retailers alleging the use of fictitious sales pricing. Similar cases have been filed against Macy’s and JC Penney. Companies should remember that advertising discounts and sale prices are legal but the prices advertised (both regular and sale) must have a legal basis and be in compliance with federal guidance and applicable state laws.