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Retail Pricing Strategies Can Lead to Legal Troubles

Pricing is seen by retailers and online sellers as a marketing tool, particularly sales and discounts – but sometimes it can land them in hot water. The latest example involves a top fashion brand, and while in this case it doesn’t involve online sales, the implications are very real to online sellers.

A shopper sued Kenneth Cole Productions Inc. over its pricing strategies at outlet stores, according to BigClassAction.com. Plaintiffs allege the brand deceived shoppers by inflating its original prices to show steep discount prices on items sold at its outlet stores.

The lead plaintiff asserts that she was induced to purchase a sweater and shirt top from a Kenneth Cole Outlet store in California “after noticing significant differences in price between the “MSRP” and “our price” label, particularly after observing that not all product price tags made this distinction.”

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Overstock.com similarly got in trouble when a group of district attorneys in California sued the online retailer, accusing it of overstating its deals and misleading consumers.

Another case shows merchants can land in trouble even when it’s an algorithm doing the pricing – or rather, repricing. The US Justice Department’s Antitrust division charged an Amazon seller with price-fixing, stating, “We will not tolerate anticompetitive conduct, whether it occurs in a smoke-filled room or over the Internet using complex pricing algorithms.”

The lesson for sellers: when you’re developing your pricing practices, keep consumer laws top of mind.

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Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. Send news tips to ina@ecommercebytes.com.


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