Deceptive Discounting: Retail Sale Advertisements Under Fire

We see the advertisements all the time – huge signs in retail store windows announcing “40% Off Everything!” or “50% Off Your Purchase!” But we sometimes find out that “Everything” doesn’t always mean everything, and “Your Purchase” doesn’t always mean your entire purchase. Often these advertised great sales are subject to dozens of exclusions – specific items, categories of items, and even entire departments – but we sometimes do not find out about those exclusions until we hit the checkout line.

Consumers are starting to fight back against bold advertisements for huge or all-encompassing sales that are quietly whittled down by scores of exclusions. Recently, a major clothing and accessories retailer was sued in the California State Court in a $10 million putative class action lawsuit for this so-called “deceptive discounting.” The lead plaintiff in the putative class action claims he saw an advertisement in the window of one or more of the retailer’s stores advertising something along the lines of “40 percent off your purchase.” He claims the advertisement “enticed” him to enter the store, select several items to purchase, and head to the cash register to pay. But, he claims, at the register, he was told the store wouldn’t sell some of those items at the advertised discounted price. The plaintiff alleged the retailer was deceiving consumers by luring them into its stores with advertisements representing all of the products in the stores were on sale, while failing to indicate that the sale applied only to certain products or that certain products were excluded from the sale.

The Federal Trade Commission has commented that there are no specific Federal regulations dealing with fine-print disclosures for sales, such as the disclosure of excluded items or categories of items from a broader sale advertisement. But, the FTC elaborated, there is a general principle that the terms and conditions for the sale of any product or service must be clearly and conspicuously disclosed. Furthermore, there may still be state-specific laws or regulations on the terms of sales that could govern the ways sales and exclusions from sales must be disclosed to consumers. California, for example, has its Consumers Legal Remedies Act, which contains provisions about advertising goods for sale with the intent not to sell them as advertised. 

Sales with exclusions are certainly not a new concept, and they will likely remain a fact of life in the marketplace. But perhaps instances like this $10 million putative class action should encourage companies to at least clearly advertise both their sales and their list of  exclusions or excluded items in an effort to be more transparent. In designing each sale ad campaign, then, a company should consider the question: What expectations will this sale advertisement campaign create in a reasonable customer behaving in a reasonable manner?

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