‘Sham Markdowns’: Class Action Claims Spokeo Tricks Buyers into Thinking Reports Are On Sale

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A proposed class action lawsuit claims Spokeo has misled consumers by falsely advertising that the reports sold on its website are available at a discount.

According to the 28-page lawsuit, the defendant has advertised “sham markdowns” on spokeo.com, a people-search website where users can buy electronic reports containing a searched individual’s personal information, including contact details and job history. The case says that although Spokeo includes the prominent phrase “YOU SAVED $1.00 ON THIS ORDER!” on its checkout page, and states on its initial purchase webpages that users can buy reports for a “SPECIAL PRICE” of $0.95, the purported discounts are fictitious.

Per the suit, Spokeo never sells its reports for the advertised “original” price, i.e., $0.95 plus the $1.00 buyers are told they have saved, and the purported “deep discounts” users receive are not discounts at all.

“The ‘deep discount’ of products communicated to consumers viewing Defendant’s e-commerce website constitutes a misrepresentation by Defendant,” the complaint contends. “The ‘original’ price communicated by Defendant merely serves as a false reference price Defendant uses as part of a larger scheme to deceptively manufacture false discounts to incentivize consumers to make purchases.”

According to the case, it is “well-established” that false reference pricing, i.e., when a seller fabricates an “original” price to trick consumers into believing they are purchasing an item on sale, violates state and federal law. California law, for example, prohibits sellers from discounting an item from its original price or a competitor’s price for more than 90 days, the case says. After the 90-day timeframe is up, the seller must either return the item to its original price or disclose to customers the date on which the product was last offered for the advertised original price, the suit relays.

Moreover, the Federal Trade Commission Act specifies that when a seller advertises a product at a discount from its original price, the item must have been sold at that price on a regular basis for a commercially reasonable period of time, according to the complaint.

The lawsuit alleges Spokeo’s use of the phrases “YOU SAVED $1.00 ON THIS ORDER!” and “SPECIAL PRICE” is misleading in that consumers are led to believe that the reports on Spokeo.com are normally sold for a price higher than $0.95, and that they have been discounted for a limited time. In truth, the suit says, Spokeo reports are perpetually discounted and never sold for the apparent “original” price of $1.95, as implied by the defendant.

Consumers who buy the reports, despite believing they are getting a good deal, are paying “the usual retail price” for the products, the lawsuit argues.

“The only plausible explanation for Defendant’s above illustrated practice is to drive sales, artificially inflate the perceived value of its products, and, as a result, artificially inflate the price at which consumers are willing to buy its products,” the complaint reads. “Defendant has, and without intervention will continue to, increase sales by creating the illusion of short-lived bargains through purporting to offer products on sale from false original prices.”

The case looks to represent anyone in California who, within the applicable statutory period, purchased from Spokeo’s e-commerce website, spokeo.com, one or more products at a discount from an advertised reference price and have not received a refund for their purchase.

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