Overstock.com Faces $6.8 Million Penalty for Fraudulent Pricing Practices

overstockYou know that guy in the Overstock.com commercial who buys an engagement ring for a steal? He may want to double-check how great that deal really was after a California judge ruled the company’s price comparison techniques are a bit shady.

The tentative ruling charges the company of engaging in fraudulent comparative pricing practices and comes with a hefty $6.819 million civil penalty, reports Wired.

In 2010, California district attorneys sued Overstock for $15 million claiming false and misleading claims about prices for products.

The judge found that Overstock’s price comparison techniques violate California’s unfair competition and false advertising laws.

Currently, when a customer uses Overstock, the company compares the price of a particular product to a price recently offered by just one competitor.

As part of the ruling, Overstock will either have to explain its comparisons on the site, or use other methods to take into account prices from more competitors. Once the ruling is made final, Overstock will have 60 day to comply.

If Overstock complies with the ruling, the average discount shown will drop from 33 % to 26%, adds Wired, but it’s likely the company will appeal the judge’s decision.

This isn’t the first time Overstock has been in a bit of hot water for deceptive practices.

In 2011, Google penalized Overstock.com after finding the online retailer was artificially boosting its prominence in search results.

Court Decision Could Change Rules for Online Price Comparisons [Wired]