deceptive pricing

Michael Kors recently agreed to a settlement in the lawsuit brought against the company last July over deceptive pricing techniques. Tressa Gattinella claimed in her lawsuit that Michael Kors engaged in deceptive pricing practices in regards to the products sold in its outlet stores. In particular, Gattinella claimed that the brand created the illusion of a discount where there actually was none.

Michael Kors Spring/Summer 2014 Show. Image: Christopher Macsurak via flickr.com

For example, she purchased a pair of jeans that had a price tag stating that the MSRP (Manufacturer Suggested Retail Price) was $120 but that the jeans were being sold for the low price of $79.99, leading Gattinella to believe that she was saving money. However, because the brand produces products specifically for its discount stores, by signifying a “discount” price, the brand is misleading its customers into thinking that they are purchasing products at a discount when in actuality they are not.

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Though “fashion law” is an area of law that has always existed, its recent prominence within the legal field is bringing to light many issues that retailers and brands weren’t thinking about before. For example, a recent Corporate Governance Report by Bloomberg Bureau of National Affairs discussed what legal issues may be affecting retailers and brands within the fashion industry in 2015.

The report highlighted 8 trends that brands should be aware of this year, ranging from the prominent unpaid internship class action lawsuits, to new regulations on employee social media policies.

One of the major trends the report discusses is the “Made in USA” litigation. Over the past year 8 brands and retailers were sued by consumers who alleged that these companies failed to adhere to California’s statute that prohibits companies from using a “Made in the USA” label unless every single element used in the creation of the piece was completely made in the USA.

The report discusses how most of these cases brought under this California statute in the past were settled. However, many of the lawsuits brought in 2014 will probably be decided this year. The defendants argue that the California statute is in conflict with the federal statute, which doesn’t require that every piece of the clothing be made in the USA to use the “Made in the USA” label, and to adhere to both statutes is burdensome and difficult.

Most of the lower courts have disagreed with this argument and have allowed the lawsuits to proceed. This shows that brands must be aware of the labeling they decide to use for the products they create, especially if they are doing business in California.

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Michael Kors Settles Deceptive Pricing Lawsuit

Fashion Law Trends for 2015