Spann v. JCPenney and People of California v. Overstock.com
By Rodger L. Eckelberry, Rand L. McClellan, and Jacqueline K. Matthews June 30, 2015
A recent class certification decision in California involving challenges to a retailer’s price comparison advertisements should prompt retailers to carefully evaluate their sale advertising practices. Whether comparing to “regular” or previous prices, or to the sale prices of competitors, comparison price advertising is increasingly being challenged in court.
In Spann v. JCPenney, the United States District Court for the Central District of California last month certified a class of JCPenney customers who had purchased items advertised as discounted from JCPenney’s “original” price for the same item. Spann v. JCPenney, No. SA CV 12-0215 FMO, 2015 WL 3478038, at *24 (C.D. Cal. May 18, 2015). The plaintiff alleged that the vast majority of these items were never actually sold at the purported higher, “original” price, and thus the purported “sale” prices were false or misleading. The court in JCPenney noted that the practice of comparing one’s own current price to one’s own previous price, or to the price of a competitor, is a widespread sales tactic that can be effective in inducing customers to make purchases. In fact, JCPenney itself previously touted that it was eliminating price comparisons from its advertising in favor of “square deal” pricing, and saw a precipitous corresponding drop in its sales volume. Less than a year later, it reinstated its comparisons to its own “original” prices. Read more >>
