The common retail practice of comparing an item’s current price with a higher “original,” “regular,” or “MSRP” price has recently come under increasing fire from consumers, who say the higher comparison price is often fictitious and misleads shoppers into believing they are getting a better bargain than they really are. Over the past two and a half years, more than 50 putative class actions have been filed in courts across the country, seeking relief under state consumer protection statutes for purchases made in reliance on these allegedly misleading price comparisons.
Until recently, these class actions had been concentrated in California, where plaintiffs can take advantage of state statutes that do not require a consumer to show that they sustained an actual economic loss in order to state a claim. Under each of California’s three consumer protection statutes, plaintiffs sufficiently plead an injury so long as they allege they would not have made the purchase but for the misleading price comparison. Hinojos v. Kohl’s, 718 F.3d 1098, 1107 (9th Cir. 2013). That is, even if the items they purchase are worth no less than what consumers paid for them, the California statutes still permit consumers to obtain relief in the form of restitution or an injunction.
New York state and federal courts have expressly rejected this theory of injury under New York’s consumer protection statutes, holding that some difference between the value and the price paid is necessary to plead injury. See, e.g., Weisblum v. Prophase Labs, Inc., 88 F. Supp. 3d 283, 292 (S.D.N.Y. 2015). New York might therefore be assumed to be a less attractive forum for price comparison class action plaintiffs. Nevertheless, five separate putative class actions alleging false or misleading price comparisons have been filed in the Southern District of New York against five different retailers in the past six weeks alone.
It’s clear that at least a subset of the New York plaintiff’s bar has caught the scent of these price comparison claims, and the class action filings are likely to continue piling up. Retailers operating in New York, whether they deal in clothing, electronics, furniture, or anything in between, need to be prepared to defend their pricing policies against this type of attack.