Similar to our recent piece, there has been an increase in California-based litigation concerning advertising products at allegedly discounted prices and lawsuits claiming that this practice violates California’s laws on false advertising (“Strikethrough Price Law”) have followed. Below, we broadly discuss the: (1) Strikethrough Price Law; (2) typical allegations asserted in Strikethrough Price Law complaints; and (3) implications of the Strikethrough Price Law for retail businesses.
The Strikethrough Price Law and Recent Allegations
The Strikethrough Price Law prohibits companies from, among other things, advertising the former price of products “unless the alleged former price was the prevailing market price . . . within three months next immediately preceding the publication of the advertisement or unless the date when the alleged former price did prevail is clearly, exactly and conspicuously stated in the advertisement.” Stated differently, the Strikethrough Price Law requires companies to have offered products for sale at their non-discounted prices, or the prevailing market price, at some point in time during the three month period immediately preceding the advertised discounted price.
Lawsuits alleging violations of the Strikethrough Price Law usually claim that the subject companies advertise products as being substantially reduced from their original or regular prices, but, in reality, the companies routinely (or exclusively) sell these products at the featured “reduced” prices. According to Strikethrough Price Law complaints, this practice creates a false sense of urgency for consumers to buy the allegedly discounted items before they revert back to their former prices. As a result, complaints assert that this practice constitutes false advertising and unfair or deceptive business practices in violation of California’s Business and Professions Code (“BPC”) and the Consumers Legal Remedies Act (“CLRA”), respectively.
Failure to Comply with the Strikethrough Price Law Can Be Costly
Although consumers may only obtain restitution and injunctive relief for BPC violations, the CLRA allows consumers to recover: (1) statutory damages of $1,000 per violation; (2) punitive damages; together with (3) attorneys’ fees and costs. The Strikethrough Price Law is yet another example of California’s robust consumer protection laws, and it further underscores the need for companies to hire experienced counsel. The attorneys at Klein Moynihan Turco have decades of experience in advising businesses on federal and state consumer protection laws, including defending businesses in regulatory and privately litigated matters.
If you have been named as a defendant in a Strikethrough Price proceeding or need assistance with federal and state consumer protection law compliance, please email us at info@kleinmoynihan.com or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice nor is it a substitute for seeking legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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