False Advertising Lawsuits Claim Carter’s, The Gap, Banana Republic Post Fake Price Discounts at Factory Outlets, Online

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Carter’s, The Gap and Banana Republic face new class action lawsuits that allege the retailers continually advertise fake price discounts at their factory outlet or brick-and-mortar stores and online.

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The false advertising lawsuits against The Gap, Banana Republic and Carter’s accuse the companies of deceiving consumers with misleading artificial price disparities for sale items that lead shoppers to believe that the product has a higher market value than it actually does and that they are getting a good “deal,” which, in turn, induces them into purchasing the item. So-called false reference price schemes allow retailers such as the defendants to sell products above their true value, the cases summarize. 

“Consumers are thus damaged not only by not receiving the promised discount, but by paying a premium the products would not have commanded but for the false reference pricing scheme,” the lawsuit against Banana Republic reads.

False reference pricing occurs when a retailer makes up an “original” price for a product and then sells that item at a substantially lower price under the guise of a discount, the suits explain. An example of this included in each complaint is that of a DVD seller who knows it can sell a particular DVD for $5, a price representing the market price and at which the seller could make a profit. However, in a false reference pricing scheme, the seller would tout a fake “original” price for the DVD of $100 and misleadingly advertise it as “on sale” at 90 percent off for $10, thus leading consumers to believe the product is a good deal given its apparent previous price, the lawsuits relay. 

With retail clothing, consumers often “lack full information about the products” and as a result rely on the information provided by sellers to make buying decisions, the complaints state. Understandably, consumers place great value on receiving a good bargain and are strongly influenced by purported sale prices at stores and online, the filings say.

The lawsuits accuse each retailer of advertising items in stores at a certain percentage off the “lowest ticketed price” and/or at whole-price discounts that allow the item to be sold for significantly less than its “original” price. 

The supposedly original prices stated by Carter’s, Banana Republic and The Gap are not accompanied by any language that could direct consumers to compare reference prices and the purported discount “to any other market outside of the particular factory store where it is being advertised,” two of the suits say.

Similar reference pricing conduct occurs on the fashion retailers’ respective websites, the cases allege.

The Carter’s lawsuit looks to cover all individuals in Oregon who, within the applicable statute of limitations period, bought from a Carter’s store or online one or more products at discounts from an advertised reference price and who have not received a refund or credit for their purchase. 

The Gap and Banana Republic lawsuits look to cover all California residents who, within the applicable statute of limitations period, bought from a Gap factory outlet in the state, GapFactory.com, a Banana Republic factory store, BananaRepublic.com, or BananaRepublic.GapFactory.com one or more products at a discount from an advertised reference price and who has not received a refund or credit for their purchase. 

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