Consumer Alleges Gap, Banana Republic Sell Products at Factory Stores at Fake Discount Prices

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In a proposed class action lawsuit filed in mid-October, a New Jersey consumer alleges The Gap and Banana Republic violated consumer protection laws by advertising products for sale at their factory stores at fictitious original prices and percentage-off discounts. The 37-page lawsuit—filed against The Gap, Inc.; Gap (Apparel) LLC; Gap International Sales, Inc.; Banana Republic, LLC and Banana Republic (Apparel) LLC—alleges the companies uniformly sell products with tags that list fake base prices, i.e. artificially high prices that, on their surface, look like each item’s original, non-discounted price, but are not based on any real price at which a product was ever sold.

“These fake base prices are then used by [the defendants] to create the misleading impression in the minds of consumers that the prices of the items have been ‘discounted’ when [the defendants] offer to sell these items at a price far lower than the fake base price,” the complaint explains, adding that the “overwhelming majority” of Gap and Banana Republic products sold at factory stores are never sold for higher than their tagged fictitious prices. When products are sold at their listed fake prices, the plaintiff claims, they are never available for more than only a few days.