DEEP IN OUR BONES, many of us suspect
that the barrage of sales promotions
we see in stores and online have to
be a trick in some way ... we just don’t
know exactly how. Add to that the
desire—and need—we have to pay a
low or at least fair price for products
we want for ourselves or as gifts at
the holidays. Starting with Black
Friday (this year Nov. 23), then on to
Cyber Monday (Nov. 26), retailers use
sales come-ons to ignite our holiday
shopping spirit—and to get us to loosen
our grip on our wallets.
Shopping can be fun or exhausting
or both, depending on who you
are and what’s going on in your life.
Regardless, the need to scrutinize sales
deals and be a careful shopper is more
important today than it ever was, given
the ease of our “buy with one click”
shopping culture. Class-action lawsuits
iled by consumers over allegedly
deceptive pricing practices have been
on the rise recently. Since 2014, more
than 150 lawsuits have been brought
against more than 80 retailers, alleging
that they duped consumers through
false price advertising, says Stephanie
Sheridan, a partner with law irm
Steptoe & Johnson in San Francisco,
where she represents retailers.
The timeless strategy of discounting
is that stores hope to get us to buy
impulsively rather than thoughtfully,
lest we change our minds. And a lot of
research shows that it works. “A sale
sign causes a physiological arousal in
our brains and clouds our reasoning,”
says Kit Yarrow, professor emerita ofpsychology at Golden Gate University
and author of “Decoding the New
Consumer Mind: How and Why We
Shop and Buy” ( Jossey-Bass, 2014). “We
become more competitive, emotional,
and less rational when we see sales
signs. As a result, we make some of our
worst shopping decisions,” she says.One of the most problematic sales
practices in recent years concerns the
legitimacy of “original” prices printed
on price tags, says Meghan Stoppel,
assistant attorney general and head
of the consumer protection division in
the Nebraska attorney general’s oice.
Federal and most state laws generally
prohibit comparing a sale price against
some other price (like a manufacturer’s
suggested retail price, or MSRP; a
competitor’s price; or some other
former price), Stoppel says, unless
that “anchor price” was ofered to the
public for some reasonable period.
However, what exactly is a “reasonable
period” has not been deined by the
federal government, which leaves it up
to each state to try and interpret what
that means on a case-by-case basis, says
attorney Sheridan. But if the anchor
price was never available to consumers,
there’s no real sale, and so the sale
price is deceptive.
To check the legitimacy of discounts
ofered by 19 national retailers,
Consumers’ Checkbook, an independent
nonproit advocacy group, tracked the
prices of 20 big-ticket items sold for
10 months last year. It found that many
of the items were advertised as on sale
more than half of the time. And at a few
chains— JCPenney, Kmart, Kohl’s, Macy’s,
Neiman Marcus, and Sears—most items
were ofered at a discount every week oralmost every week. In other words, the
“regular price” listed on all those price
tags was seldom, if ever, actually the
price customers paid, according to the
Consumers’ Checkbook report. Only two
retailers, Bed Bath & Beyond and Costco,
consistently ofered legitimate sales.
In emailed statements, Sears, which
also owns Kmart, disagreed that its
pricing is misleading or deceptive,
writing that “we are uniquely
positioned to provide discounts to our
members and customers in a number
of diferent, legally compliant ways.”
JCPenney said it was committed to
“delivering the quality, price, and
value that customers expect.” Macy’s
airmed that its sale pricing varies for
each item depending on a number of
factors. Kohl’s and Neiman Marcus did
not return our request for a comment.
According to Sheridan, at the begin-
ning of 2017, very few of the lawsuits
iled against retailers had advanced
past preliminary stages. But in January
of that year, Amazon agreed to pay
$1.1 million to resolve a suit brought by
the Canadian Competition Bureau, a
law enforcement agency that ensures
businesses operate in a competitive
manner, concerning pricing practices on
its Canadian website. Per the Bureau’s
report: “Amazon often compared
its prices to a regular price—or ‘list
price’—signaling attractive savings for
consumers.” The agency concluded that
these price comparisons led consumers
to believe that prevailing list prices
were higher than the prices they were
being ofered. And the investigation
determined that Amazon failed to verify
that the list prices its vendors supplied
were, in fact, correct. At the time the
settlement was announced, Amazon had
already made changes to validate list
prices provided by suppliers. Amazon
declined to comment on the record.
On June 2 last year, the California
Court of Appeals airmed that
Overstock.com had to pay $6.8 million
in penalties. The major issue was
Overstock’s use of “advertised referenceD
THE
SNEAKIEST
SALES
PLOYS
38 CR.ORG DECEMBER 2018