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Ever wonder how much money you saved on your last purchase? After buying three blouses at JCPenney for $17.99, Cynthia Spann asked herself that same question.
Unfortunately, upon conducting a little research, she claims she found out that the blouses she had just purchased at 40% off were actually never priced above $17.99. Thus, Spann believes that JCPenney's "40% off" promo was nothing more than a phantom discount.
Now Spann has filed a class-action suit against JCPenney for allegedly running a "massive, years-long, pervasive campaign" designed to deceive shoppers. But if past such lawsuits are any indication, she might have a difficult time proving it.
JCPenney has had a public history of changing its pricing strategies, some of which have failed while others have worked, according to the company. During ex-CEO Ron Johnson's tenure, the retailer eliminated all sales for what it called everyday low prices. However, the tactic failed miserably and JCPenney began to lose money.
So after Johnson's departure, JCPenney reinstated its "high-low" pricing strategy, wherein they give products higher retail prices, so that they can later discount said items more aggressively. That commonly-used practice is also known as "price anchoring."
According to Reuters, the Federal Trade Commission allows this practice so long as retailers sell items at those original prices for a "reasonable length of time" before marking them down. Basically, if there's evidence that the item was actually that retail price at one point, then the store can advertise as such. However, Spann claims that JCPenney never sold the blouses in question for more than $17.99.
As a result, U.S. District Judge Fernando Olguin has allowed Spann to file a lawsuit claiming that JCPenney made up retail prices in order to trick shoppers into believing they were getting big discounts when said items were on sale. The plaintiffs include consumers who bought private-label or exclusive items from JCPenney in California from November 5, 2010 to January 31, 2012 at discounts of 30% or more.
JCPenney isn't the only retailer accused of such sales tactics. Kohl's and Jos. A. Bank have been hit with similar lawsuits in the past. In the case of Jos. A. Bank, it was the retailer's exaggerated BOGO sales that got the company in hot water.
However, a judge ultimately dismissed the class action suit on the basis that the plantiffs failed to provide any facts which "demonstrate that the 'sale' price offered is identical to the true regular price of the merchandise and thus a misrepresentation."
Readers, what do you think of this lawsuit against JCPenney? Let us know in the comments below!