NEW YORK (Legal Newsline) – Zulily has declined to comment on a class action lawsuit that alleges the Seattle-based online retailer, which operates across the U.S. and overseas, engaged in unlawful price-scheming in violation of New York law.
Specifically, the lawsuit states Zulily inflated the prices of merchandise in its own “Reborn” women’s clothing collection. The complaint describes a practice known as “price anchoring,” in which retailers advertise both an inflated original price and a deeply discounted sale price to make consumers think they are getting a good deal.
Because the retailer never actually offered the item for sale at the original price, however, the consumer does not actually get a discount, the plaintiffs claim.
Both Zulily and the attorneys for the plaintiffs declined to comment. A scheduling conference has been scheduled for May 13.
Plaintiff Stephanie Preira is represented by attorneys at Denlea & Carton in White Plains, N.Y.
Zulily is not the first retailer to come under fire for alleged price anchoring. Several companies, including brick-and-mortar stores, have faced similar lawsuits.
In 2015, retail giant J.C. Penney Company agreed to pay $50 million in a class action lawsuit brought by plaintiffs who claimed the company ran an intricate campaign to dupe consumers into believing they were receiving lucrative discounts on the store’s private-label brands and exclusive merchandise.
Matthew Zevin, a lawyer for the plaintiff class, told Reuters these types of cases could number hundreds of thousands.
“Price comparisons are not illegal, but it is deceptive if there is no basis for the original price," he said.
Kohl’s, Macy’s and Bloomingdale’s also have been hit with class action lawsuits claiming they used price anchoring to attract customers.
According to a Time Money report, the case filed against Macy’s and Bloomingdale’s alleges the retailers engaged in unfair business practices and false advertising, with a key part of the complaint stating: “In some instances, they represented that the listed or original price was two or more times the manufacturer’s suggested retail price ('MSRP'), and then offered the item at a purported 50 percent or more discount price, which was in fact the original MSRP.”
Luxury retailers have also faced class action lawsuits over deceptive pricing. Reuters reported that U.S. retailer Michael Kors agreed to pay $4.88 million to settle a lawsuit claiming it created the illusion of discounts. London-based luxury brand Burberry has also been named a defendant in a lawsuit claiming it advertised misleading prices to trick consumers into thinking they were getting a deal.
Other merchandisers have paid millions to settle “going out of business” sales that were later discovered to be fabrications for the purpose of luring in consumers looking for discounted prices. In 2014, Legal Newsline reported that Viking International Furniture Corporation settled a deceptive pricing case brought by New York Attorney General Eric Schneiderman.
“This case sends a clear message that our office will hold businesses accountable when they use false or misleading advertising practices to deceive consumers,” Scheiderman said.