Los Angeles City Attorney Sues Macy’s, Kohl’s, J.C. Penney, Sears for Pricing Scam

People exit from J.C. Penney store at Herald Square in New York City on Nov. 25, 2016.

Four major retailers are named in a lawsuit brought by the Los Angeles City Attorney’s Office on Thursday over alleged deceptive advertising that duped customers into thinking that they were saving money.

Macy’s, Kohl’s, J.C. Penney and Sears are the retailers accused of falsely advertising high regular prices on merchandise that was never actually for sale at that price, leading customers to believe that they were getting a deal when they weren’t, the Los Angeles Times reports.


In a statement, the Los Angeles City Attorney’s Office said that this practice, called false reference pricing, plays “a major role in the companies’ overall marketing and business strategies.”

All four retailers have declined to comment on the pending litigation.

California laws prohibit retailers from listing a higher original price unless the item was actually sold at that price within the last three months. Additionally, retailers advertising a higher former price must “exactly and conspicuously” give the dates for when that price was in effect.

“Customers have the right to be told the truth about the prices they’re paying—and to know if a bargain is really a bargain,” City Attorney Mike Feuer said in the statement.

The lawsuit cites recent examples of false advertising.

The Times reports that in February, J.C. Penney began selling a top for a maternity bathing suit online for a “sale” price of $31.99. It was subsequently marked down to $21.99 and then $14.99. The original price was listed as $46, but the top never sold for that amount. The highest price it ever sold for was $31.99.


In another instance, Sears began selling a Kenmore washing machine for $999.99 and advertised it as being marked down from $1,179.99. The machine never sold for more than $999.99.

“As time went on, the item had a series of different false discounts,” the suit alleges. Sears eventually discounted the item down to $649.99 while “falsely advertising a discount from the $1,179.99 false reference price.”


This isn’t the first time that J.C. Penney and Kohl’s have been in trouble for false-reference-pricing schemes. In 2015, both were the subjects of class action lawsuits accusing the retailers of inflating original prices. According to the Times, J.C. Penney settled the suit for $50 million in cash and store credits to the customers; Kohl’s paid $6.15 million.

Read more at the Los Angeles Times.

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