Ross Stores customers suing the off-price retailer for what they said were "deceptive" and "misleading" pricing practices in a class action lawsuit have asked the United States District Court for the Central District of California in Los Angeles to approve a $4.9 million settlement, which the retailer has agreed to, according to court documents.
The figure aligns with the customers' original request in a lawsuit filed in 2015. It represents "merchandise credit with cash redemption option, administrative costs, attorneys' fees and expenses, and incentive awards," documents show.
The plaintiffs had alleged unfair and fraudulent business practices, false advertising and violation of California consumer legal remedies, according to the original lawsuit. Their main concern was "labeling the products [Ross] sells in its California stores with false and/or misleading comparative prices which purport to be charged by other merchants for the same products."
Deceptive pricing has emerged as a premier irritant for discount hunters, who feel duped when they discover that the "compare to" prices or "price drop" listed on retailer's merchandise tags or e-commerce pages turn out to be misleading at best and outright false at worst.
TJX retailers, Kohl's, J.C. Penney, Zara and Amazon are all among those that have drawn complaints and lawsuits over the issue, and there's little upside in either the court of public opinion or actual legal forums. Regulators and courts don't like it when retailers take the practice too far, because they do consider it deceptive.
State attorneys have similarly cracked down on the practice of listing "price comparisons" that don't accurately reflect price differences between one retailer and another. Savvy shoppers have also learned, through "showrooming" and special apps, to compare prices before making a purchase rather than taking retailers' word for what the lowest price is. That, no doubt, is perpetuating the pressure to offer yet more discounts, real or imagined.
But consumers themselves have a role in perpetuating the practice. When former J.C. Penney CEO Ron Johnson tried to eliminate the practice of tagging discounts onto merchandise that had never really sold at its original price, for example, he was met with vocal protests from J.C. Penney's most loyal customers.
Off-price retailers like Ross may be resorting to fudging "compare to" prices more often on more merchandise because of the changes in recent years to their merchandise pipeline. Off-price businesses once almost exclusively derived their inventory from first-run, top-label goods leftover at department stores, and treasure hunters would scour their racks for deals on brand names. But in recent years, as those brands have balked at showing up at low prices at discounters and as the department stores have declined in general, off-pricers have increasingly turned to assortments made especially for the discounters themselves, items that never had first runs elsewhere.
"Supply may become an issue because the engine of legitimacy, principally the department store is disappearing," Mark Cohen, director of retail studies at Columbia Business School, told Retail Dive in an email earlier this year. "There isn't going to be a shortage of merchandise any time soon, but there may be a problem establishing and representing 'regular prices' that off-price feeds off of."