Lawsuit Accuses Kohl’s Of Advertising ‘False’ Original Prices

Is it fair to consumers when a retailer sells their own private-label products at a “discount” from the prices that they set in the first place? Two Kohl’s shoppers in California say that it isn’t, and they’ve filed a federal class action suit alleging that discount department store Kohl’s does exactly that.

If this sounds familiar, yes, it’s very similar to a lawsuit filed against TJ Maxx that we shared yesterday, where the closeout retailer is accused of making up the prices on “Compare at” tags on its merchandise.

The two lead plaintiffs claim that the real problem is with the store’s own brands, which include Sonoma, Apt. 9, Croft & Barrow, Daisy Fuentes, Elle, Mudd, Jennifer Lopez, and Simply Vera. Since Kohl’s owns these brands, the “original price” that they set on any item is arbitrary.

Yet shoppers love discount games, so all a retailer has to do is start us out with the idea that an item is “worth” more than they want to charge for it. If they want to sell a dress for about $24, they could mark the “original” price as $40 with a 40% discount. Easy!

The lead plaintiffs say that’s exactly what is happening every day at Kohl’s. (PDF download) “As a result,” their lawyers write in their initial complaint, “Plaintiffs and members of the proposed Class… received items of lesser value and quality than they expected and Kohl’s unlawfully, inequitable, and otherwise improperly was thereby unjustly enriched and benefited.” In other words, that $24 dress was never worth $40 to anyone.

It’s one thing when an off-price retailer sells clothes from other brands that you could theoretically find in a department store, even if the items bearing fancy brand names that you find in stores like TJ Maxx and Marshalls or in brand outlets are actually produced specifically for the off-price or outlet market.

While Kohl’s does business in the same way nationwide, this class action only applies to California, alleging violations of that state’s false advertising, and unfair competition laws.

The plaintiffs ask that Kohl’s stop tagging items with what they call “false, untrue, and misleading ‘regular’ or ‘original’ prices,” as well as restitution for items that they have bought based on those “false” original prices.

Original Complaint [PDF]