MINNEAPOLIS (Legal Newsline) — A San Diego man claims that Select Comfort sold him merchandise at a deceptive sale price, raising yet another multimillion-dollar price-scheming accusation against a major retailer.
On Dec. 4, Saeid Azimpour filed a class action lawsuit in a Minnesota federal court. He alleges that he purchased a pillow from the mattress and bedroom accessories retailer for approximately $48.59, which was advertised at a 50 percent discount from the original retail price of $89.99.
However, after four months, Azimpour noticed that the pillow was still on sale and argues that Select Comfort sells merchandise at “phantom discounts” to mislead customers and misrepresent their merchandise. In a discount-driven market, sales are proven to drive the consumer to a purchase, and retailers know this, said a business professor at the University of Southern California.
“The consumer psychology literature indicates that consumers are happy to receive a perceived discount – to 'get a good deal,'" said Anthony Dukes, Associate Professor of Marketing at the Marshall School of Business at USC.
"This is one of the important psychological factors on which this practice is based. Another factor is the perception that the regular price creates. A high regular price suggests to the consumer that the product is of good quality or very valuable."
Advertising laws exist at a state and federal level to protect consumers from misleading discount prices. But because the stipulations vary, the gray areas of regulation and compliance make price-scheming an easy target for lawsuits, Dukes said.
“State laws, such as those passed around 1990 in Colorado, try to specify exactly what 'regular price' means. For instance, a price can be called 'regular' if it had been offered for several weeks or a specific number of people paid that price. The FTC also has guidelines that vaguely try to define this as well,” Dukes said.
The Select Comfort case is just one in a long line of deceptive advertising lawsuits against retailers that seems to be representing a trend in the legal market.
Retail giant Kohl’s was targeted last year with two lawsuits in California that alleged discounts in the stores were false and part of a regular practice of consumer deception. The store did not admit any wrongdoing and paid nearly $1 million in a settlement.
Lawsuits in 2014 against Michael Kors LLC and Neiman Marcus Ltd. also accused the retailers of consumer deception in sale prices.
The National Retail Federation reported 151 million shoppers, 67 percent of American consumers, shopped online or in-store on Black Friday, specifically looking for discounts. With the ultimate goal of consumer satisfaction, it would behoove retailers to offer discounts, but how they go about it is still being debated, Dukes said.
“The extent to which this practice actually deceives the customer is, now and in the past, at the heart of controversy," Dukes said.
"What I think is missing is the extent to which a perceived discount brings the consumer some positive experience. For example, if the consumer believes (perhaps even falsely) that (s)he scored big with a discount, then should policy makers take into account that (s)he may be very happy about the purchase?”