Not Saving A Penny: Lawsuit Claims JC Penney’s Sales Are Fake

It’s hard to resist a bargain, and companies know that. So much so that JC Penney is being accused of falsely creating the appearance of bargains by marking items as being on sale when in reality the company hadn’t intended on selling them for the original listed price any time soon, a new proposed class action lawsuit alleges.

The fake sales scheme both misleads shoppers and distorts the true value of goods, and is an “unfair, untrue, and misleading” way of doing business, not to mention illegal, the lawsuit claims.

Fake sales lure consumers in

California resident Maria Carranza filed the proposed class action lawsuit against the retail giant accusing it of “false and misleading marketing, advertising, and pricing scheme” that amounted to violations of state and federal laws. 

Carranza said she was tricked by the scheme when buying an air fryer that was marked at $60, but with a sale price of $39.99. Because Carranza thought the price wouldn’t last, she bought the fryer. 

She argues in the lawsuit that JC Penney did not plan on making the price $60 in the near future, and she wouldn’t have made the purchase if she knew the discount was false and said she “was lured in, relied on, and was damaged by the deceptive pricing scheme.”

To make the case, Carranza’s legal team “conducted a thorough investigation” into the JC Penney website and found the company consistently advertised a false reference price, with a ‘strikethrough,’ however items had not been listed at that price for more than 100 days, a violation of California law which dictates sale prices can only last 90 days. 

“Products perceived by consumers as discounted are thus not always actual bargains, and consumers’ perceptions can stem directly from sellers’ deceptions,” the lawsuit claims. 

The lawsuit says that JC Penney uses “the tactic because they know they will be able to increase sales and profits by tricking consumers into making purchasing decisions based on the advertised reference prices.”

Why do companies do it?

False reference pricing misleads consumers into believing the product they are buying has a higher market value, and it induces them into purchasing the product, the lawsuit alleges. 

“This practice artificially inflates the true market price for these products by raising consumers’ internal reference price and in turn the value consumers ascribe to these products.” 

That means that retailers can sell products above their true value, and consumers are left to pay the price, the lawsuit claims.

The lawsuit cites research that notes how consumers “sometimes expend more time and energy to get a discount than seems reasonable given the financial gain involved,” and “often derive more satisfaction from finding a sale price than might be expected on the basis of the amount of money they actually save.” 

It has also been recognized by the courts in prior cases that consumers are susceptible to a supposed bargain, the lawsuit says. 

JC Penney has been warned before

JC Penney has faced very similar allegations in the past. In 2012, a proposed class action accused the company of false advertising of the original prices, Legal Newsline reported, and in 2015 the retail giant paid out $50 million to settle the claims. 

The case was also brought in California, where the law states a seller may only discount an item from its own original price for up to 90 days. 

“At that point, on day 91, the seller has two options: the product must either return to its full original price, or the seller may continue to sell the product at the discounted price, as long as it discloses to the consumer the date on which the product was last offered for sale at its alleged former price,” the lawsuit says.

Other companies stung for similar scheme

Fake pricing isn’t just a scheme allegedly used by JC Penney. Fast fashion retailer Boohoo paid a $197 settlement with consumers who alleged in a class action lawsuit the company falsely advertised products with fake discounts, Business Insider reported. Some Ashley Furniture customers were recently entitled to $30 vouchers in a similar settlement agreement. Meanwhile, Kohl’s was recently hit with a similar proposed class action.

The Children’s Place also had to pay out millions - $6.8 to be exact - to settle a proposed class action lawsuit accusing it of using a misleading sale scheme, Bloomberg Law reported.

In her proposed class action lawsuit, Carranza is seeking monetary damages, restitution, declaratory, and injunctive relief from JC Penney for her and consumers nationwide. She is suing for violations of California’s Unfair Competition Laws, False Advertising Laws, and Consumer Legal Remedies Act.

The plaintiff and proposed class are represented by Todd Carpenter and Scott Braden of Lynch Carpenter LLP.

The JC Penney fake sales class action lawsuit is Carranza v. Old Copper Company, Inc. F/K/A J. C. Penney Company, Inc., Case No. 3:23-cv-00276-L-NLS , in the U.S. District Court Southern District of California.