Eddie Bauer, like a lot of brand-name stores, operates outlet stores which carry “direct-to-outlet” merchandise. Unfortunately, like a lot of outlet stores, the complaint for this class action alleges, Eddie Bauer outlets use false reference pricing to make customers think they’re getting a bigger bargain than they are.
The class for this action is all persons in California who, between May 7, 2015 and the present, bought one or more direct-to-outlet products from Eddie Bauer outlet stores at discounts from the advertised “reference” price, who had not received a refund or credit for the products.
Both California and federal laws forbid the offering of fictitious bargains. Fictitious bargains or false reference pricing happens when companies advertise merchandise at a discount over an “original price” even though the merchandise was never actually offered at that price. This can take the form of tags with an original price and a discounted price, with signs advertising that certain racks of items are a certain percentage off, or the like.
The Federal Trade Commission (FTC) calls false reference prices deceptive practices. If a former price advertised is not genuine but fictitious, it says, “for example, where an artificial, inflated price was established for the purpose of enabling the subsequent offer of a large reduction—then the ‘bargain’ being advertised is a false one: the purchaser is not receiving the unusual value he expects.”
California laws are particular strict. “No price shall be advertised as a former price of any advertised thing, unless the alleged former price was the prevailing market price as above defined within three months next immediately preceding the publication of the advertisement…”
The complaint says, “A ‘reference’ price matters to consumers because it serves as a baseline upon which consumers perceive a product’s value.” The complaint quotes a paper on comparative price advertising as saying, “[E]mpirical studies indicate that as discount size increases, customers’ perceptions of value and their willingness to buy the product increase, while their intention to search for a lower price decreases.”
Eddie Bauer outlets offer some merchandise that was originally for sale in its regular stores. That merchandise is not at issue in this case. What this case takes issue with is merchandise that was made specifically for the outlet stores and which is offered at false “bargain” prices. The complaint alleges that the Eddie Bauer outlet stores offer false discounts on direct-to-outlet items that were never offered at the higher prices.
The complaint brings suit under California laws.