JCPenney To Refund Customers $50M In False Advertising Settlement

JCPenney is putting a class-action lawsuit accusing the retailer of violating consumer protection laws by using deceptive discount practices behind it. 

The company announced on Wednesday that it agreed to pay $50 million to settle the complaint, which was first filed in 2012, The New York Times reports.

Under the proposed settlement, shoppers will have the option of selecting a cash payment or store credit. The total payment will be dependent on the amount of money the class member spent on private-label or exclusive items from the retailer that were purported to be 30% off or more between Nov. 5, 2010 and Jan. 31, 2013 at California stores.

The settlement stems from a 2012 lawsuit filed by a California woman who says she bought three blouses for $17.00 each at a JCPenney store. The price of the blouses allegedly represented a 40% discount from the original price of $30; however the woman later learned the shirts hadn’t sold for more than $17.99 at any time in the previous three months.

The Federal Trade Commission stipulates that retailers must sell items at original prices for a “reasonable length of time” before adding discounts, if they wish to provide the original prices to consumers who compare costs.

JCPenney continues to deny allegations that it ran a “massive, years-long, pervasive campaign” to trick shoppers into believing they were getting big discounts on brands carried exclusively at the retailer. The company says it was entering into the settlement “to eliminate the uncertainties, burden and expense of further protracted litigation.”

“While we are confident of our position, resolving this litigation removes any uncertainty and risk, which we believe is in the best interest of our shareholders,” Marvin Ellison, the retailer’s chief executive, said in a statement.

As part of the settlement, JCPenney has also agreed to improve its pricing and advertising policies. Among the improvements, the retailer must undergo “periodic monitoring and training programs designed to ensure compliance with California’s advertising laws.”

J.C. Penney Settles Shoppers’ Suit Over False Advertising [The New York Times]