JC Penney “Phantom” Pricing Lawsuit

Get this: There is definitely a real class action lawsuit against JC Penney in federal court in California over purported “phantom discounts.”

The lawsuit accuses JC Penney of hiking retail prices on apparel and accessories to trick shoppers into believing they were receiving sizable discounts when the items were advertised as being on sale.  The long and short of it is that the when retailer would run a sale, they would allegedly markup the price of the item and then “discount” it back down to the same price it had been at for months. For example, the complaint alleges that for a sale they’d mark up a shirt that had been selling for $17.99 to $30 and then they’d sell it for 40 percent off . . . or $17.99. The class action lawsuit has been certified by the federal judge presiding over the case.

To be fair, JC Penney apparently tried to move to everyday low pricing in 2012.  Ironically,  executives billed the new pricing model as the end of “fake pricing.” Apparently the customers really wanted fake pricing because the everyday low pricing was a miserable failure and they quickly went back to a more traditional discounting model.  It does make you wonder, however, if any of these claims of phantom discounting claims occurred during the period that the retailer was switching between business models.

The Federal Trade Commission does actually have regulations governing this sort of thing.  16 C.F.R. 233.1 requires retailers to sell items at original prices for a “reasonable length of time” before discounting them.  Sort of makes you wonder how Jos. A. Bank continues its thing, but that’s a story for another day.