In recent months, retailers have faced increased pressure from litigation related to their sales practices. While there is overlap, sales practices litigation can fall into four different buckets: pricing, data collection, auto-renewal, and “free” lawsuits. This post focuses on trends in recently filed pricing litigation.

Generally, in asserting claims in pricing litigation, plaintiffs argue that the proffered or advertised price of a product does not match the actual, end price charged to the user. According to plaintiffs, the pricing can be altered (and deceptive) in numerous ways.

One way that plaintiffs pursue these claims is alleging that the advertised “lower” price isn’t actually “lower” at all. The gist is that consumers are deceived because the retailer allegedly lures in consumers under the guise of obtaining a deal on a product. This is exactly what plaintiff alleged in a recently filed case against an online retailer in the Western District of Washington. There, the plaintiff alleges that the website’s advertisement of prices that are limited-time discounts or sale prices are illusory. Instead, according to the plaintiff, these “discounted” prices are simply the regular prices that the company always advertises.  

While the above example is straightforward and deals directly with alleged deception of the price of a purchased product, plaintiffs are also taking aim at other ways that prices are allegedly manipulated.

For example, recent supply chain issues have impacted retailers and industries across the globe. In response, some retailers have imposed fees on purchases to combat negative impacts from these issues. But doing so has opened some companies up to claims of deceptive acts. In a case pending in the Southern District of California, a paint company was recently accused of adding a 4% “supply chain charge” on purchases without adequately disclosing that customers would be charged such a fee. The plaintiff further contends that the supply chain charge is not really a charge related to the supply chain, but rather a way to pass along increased prices to the consumer without raising the actual prices of the products themselves.

Not only are lawsuits focusing on unexpected line items, but they are also targeting what might be considered expected ones: taxes. Typically, a consumer may expect to pay a small percentage of sales tax during a transaction, and seeing a line item for sales tax might not be surprising. But a slew of recent lawsuits in Missouri have targeted online transactions and the calculation—not the imposition—of these taxes. The allegations focus on what the applicable fee is, claiming that retailers are charging more than the applicable 4.5% sales tax to certain consumers. According to plaintiffs, the retailers pocket the excess sales tax in a deceptive manner.  

These lawsuits have focused largely on sales practices related to online shopping. That said, transactions in brick-and-mortar stores would not be immune to the claims brought in the above lawsuits. For example, a retailer that advertises 50% off in a magazine for the purchase of a product in its stores could face the same claims as the online retailer in the Western District of Washington if the in-store prices are actually just everyday prices. So too with any retailer adding fees at the point of sale like the allegation against the paint company in Southern California. Any miscalculation of taxes could also lead to litigation like that in Missouri. 

The “hidden” nature of the true costs primarily drives this litigation. At bottom, the allegations are that the consumers are told one price but unwittingly end up paying more. To combat these allegations, retailers should be upfront about the types of fees or costs that may apply to their sales. This may be accomplished by simply adding a disclosure before adding an item to an online cart stating that additional taxes or fees will apply. It could also include general disclaimers related to price that the advertised price does not include additional fees or taxes. In any event, disclosure is key to avoiding sales practices litigation.