SAN DIEGO (Legal Newsline)—Claims that Ralph Lauren offered “phantom markdowns” on its products are in line with what consumer advocates have said they found with other stores using sale prices to potentially mislead customers.
A lawsuit filed earlier this month in the U.S. District Court for the Southern District of California alleges that Ralph Lauren misled customers by artificially inflating what it called the “market price” of its products, in order to make its sale prices seem more appealing.
Kevin Brasler, executive editor of Consumers' Checkbook, said his organization has found that some stores manipulate their prices in order to convince customers they’re getting a better deal.
“What we learned is that for some stores, for at least some products, and for some stores for nearly all the products they sell, you can't have any faith that a sale price is a special price,” Brasler told Legal Newsline. “Sale prices are often manipulating and deceiving, or at least misleading, customers that what they're getting is a special price, and that they'd better act right away or that price is going to go away, when in fact the stuff is always on sale. Our view is that it's not only misleading, but it's likely illegal.”
Whether the plaintiffs will prevail in the class action suit depends on a number of factors, he said, including whether courts and juries interpret the wording of the sales to mean that the market price is what the product usually sells for.
The Federal Trade Commission has rules about sales advertising and most states have adopted those rules, he said.
“The rule says that if you offer a price and say it is a special price, it has to be a special price,” Brasler said. “I would think that most judges and most juries would interpret that law as saying, 'Well you can't have something on sale or say it's a special price more than half the time.' What we're finding in our research is that for some of these stores, it's way more than half the time.”
Most of the stores Consumers' Checkbook studied used the wording “Regular Price,” where “Market Price" could leave more room for interpretation. Brasler said it could be considered comparable to what online retailer Amazon.com has done, but including a “List Price.”
“List price could mean anything,” he said. “Most consumers, if they really thought about it, would say, ‘List price could mean what the manufacturer recommends it be sold for.’”
Another potential complication for Ralph Lauren is that the company’s retail outlets are selling clothes made by another arm of the company, meaning it couldn’t claim that market price meant a recommended price from a third party, Brasler said.
A Ralph Lauren spokeswoman declined to comment on the case, saying the company wasn’t able to discuss pending litigation.