Here's Why You Should Be Really Wary Of "Discount" Pricing

Photo: Saeed Khan/Getty Images.
Ah, the irresistible appeal of a great bargain: it’s arguably the most satisfying part of the shopping experience for many of us. There isn’t really a purchase scenario — whether it’s an item that’s been carefully researched and strategically selected, or a total impulse buy — that isn’t improved by the knowledge that the original price has been hacked down. But what if that 70% discount or “take half off!” ad was total BS?

The authenticity of retailers’ loudly touted discounts has been seriously called into question over the past few years, BuzzFeed reports, and the truth about those steeply reduced price tags will make you a whole lot more skeptical on your next shopping jaunt.

So how do many of our go-to stores fake it? There are enticing sale signs that dishonestly label things as discounted — with a "discounted" price that's actually the original cost. Outlet stores or off-price sister stores are another source of bogus sales. These retailers often sell goods that also haven’t been discounted, they're just lower quality iterations that were never sold for — or worth — a higher “original” price.

At least 35 lawsuits have been lobbed against retailers in the past four years — the claims were brought against a total of 29 different retailers, as law firm Sedgwick LLP told BuzzFeed. In addition to J.C.Penney, Michael Kors, and Justice, retailers that have gotten legally lambasted for a variety of shady price practices include TJ Maxx, Kohl’s, Burlington Coat Factory, and Last Call By Neiman Marcus. Many of these suits have happened in California, since the state has a law mandating that a “former” price listed on an item be the “prevailing market price,” of the past 90 days, along with other stringent consumer protection laws, the site reports.

J.C. Penney paid roughly $50 million to resolve a lawsuit over those completely fabricated “40% off” tags. (Justice, the tween mall staple, forked over around the same amount of money to settle a class-action suit about the some allegation, according to BuzzFeed.) On the outlet front, Michael Kors paid out $4.9 million to settle a suit accusing the label of strategically masquerading stuff made expressly for outlet malls as full-price items being discounted.

“There are so many pricing models that are available right now that it’s truly difficult to identify what is ‘regular price,” Priya Raghubir, marketing department chair at NYU’s Stern School of Business, told BuzzFeed.

So, why are completely fictitious sales flourishing in store aisles? “Price anchoring” is to blame: It’s a marketing tactic which basically tricks you into thinking you’re getting a total steal — because you’re falling hard for the comparison of that falsified “original” or “regular” price and your faux-discounted price on the tag. And, in the case of a non-outlet store, you’re also bamboozled into shelling out because the item is ostensibly on sale — compared to full-price items in the same store that aren’t marked down at all.

Stay tuned for how other deceitful-pricing cases get resolved. But based on how retailers like Michael Kors and J.C. Penney have settled these sorts of cases thus far, we just might see price tags get a bit more honest about how much — if anything! — you’re truly saving.
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