A U.S. consumer has filed a lawsuit against Spanish fast-fashion retailer Zara’s American unit over deceptive pricing practices, according to law and business publication The Fashion Law. The proposed class action suit seeks $5 million or more in damages.
Zara (owned by Inditex, the largest apparel company in the world and the innovator of fast fashion) lists its prices in Euros, enticing U.S. customers with the lower numbers. But according to the suit, filed by shopper Devin Rose in the United States District Court for the Central District of California, the U.S. dollar amount charged is far above the going currency exchange rate.
A spokesperson from Zara USA emailed Retail Dive the following statement:
Zara USA vehemently denies any allegations that the company engages in deceptive pricing practices in the United States. While we have not yet been served the complaint containing these baseless claims, we pride ourselves in our fundamental commitment to transparency and honest, ethical conduct with our valued customers. We remain focused on providing excellent customer service and high-quality fashion products at great value for our customers. We look forward to presenting our full defense in due course through the legal process.
Fast fashion has transformed apparel retail in the past decade or so, deftly copying design trends and swiftly getting clothing onto racks at prices well below its competitors. That’s been a blow to apparel retailers less attuned to trendy styles, less speedy in their supply chains, and less affordable in their price tags.
Inditex is widely credited with developing the fast-fashion approach, launching its first factory in 1975, which made small batches of on-trend apparel in record time. Its Zara brand now spans more than 2,100 stores in 88 countries: First quarter net profit rose 6%, and its apparel is a celebrity favorite.
But critics say that speed and cheapness has led to some questionable production practices, including overseas manufacturing that includes forced overtime, poor working conditions and poverty wages. Naysayers also contend that some dubious designs (like a children's top by Zara resembling Holocaust prison attire) that end up on racks wouldn’t past muster with a more methodical production process.
Now a Zara USA shopper is adding to the criticism with accusations of “bait and switch” practices that may be duping some customers into thinking that the clothing is more affordable than it really is. Rose says he bought three Zara shirts from a Sherman Oaks, CA Zara store on May 17, 2016. "The actual euro-dollar exchange rate would have resulted in his €9.95 shirts costing approximately $11.26 each,” according to The Fashion Law’s account of his filing. “Instead, however, Zara charged Mr. Rose $17.90 per garment, a markup of nearly 60%.”
The lawsuit, filed in California by law firm Geragos & Geragos, could be joined by millions of other customers if the suit is granted class-action status. "We are hopeful this class action will compel Zara to stop its unlawful pricing practices of charging substantially in excess of the tagged prices on its clothes which, on average has caused consumers to pay $5 to $50 more per item, and billions of dollars in the aggregate," Ben Meiselas, one of Rose’s attorneys, told The Fashion Law.