Tommy Hilfiger runs outlet or factory stores that sell its clothing at lower prices than its main stores. But the complaint for this class action claims that the lower prices do not reflect legitimately discounted merchandise but a scheme of false reference pricing, where customers are led to believe that the goods are higher quality than they actually are.
The class for this action is all California residents who, within the applicable statute of limitations, bought any product bearing a false reference price at one of Tommy Hilfiger’s outlet or factory stores in California.
Customers shop at outlet stores believing they will get bargains. But it is illegal to set a false “regular price” or reference price, claiming an item was originally offered at a higher price when it was not, simply to falsely create the impression of a bargain.
The Federal Trade Commission Act (FTCA) says, “Where the former price is genuine, the bargain being advertised is a true one. If, on the other hand, the former price being advertised is not bona fide but fictitious … the ‘bargain’ being advertised is a false one; the purchaser is not receiving the unusual value he expects.” It adds, “The advertiser should be especially careful … that the price is one at which the product was openly and actively offered for sale, for a reasonably substantial period of time, in the recent, regular course of business, honestly and in good faith—and, of course, not for the purpose of establishing a fictitious higher price on which a deceptive comparison might be based.”
California’s Business and Professions Code is even more specific. “No price shall be advertised as a former price of any advertised thing, unless the alleged former price was the prevailing market price … within three months next immediately preceding the publication of the advertisement…”
The complaint claims that the Tommy Hilfiger outlet and factory stores do not meet these requirements. “Defendant sells its own, exclusive Tommy Hilfiger products, specifically and exclusively designed merchandise for sale at their outlet, factory and company stores. … Defendant’s merchandise is never sold at the Reference Price listed on the price tag at any store.”
It claims that the reference price is a “fictional number” used “to lure customers into believing they are getting a good deal when they purchase merchandise at the ‘Sale Price.’”
The complaint claims the company has thus violated various California laws, including its Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act.