Kohl's accused of phony discounts

Kohl’s Corp. is being accused again of using phony discounts off “original” prices to suggest to consumers that they are getting a better bargain.

Los Angeles City Attorney Michael Feuer has sued Kohl’s Department Stores Inc., J.C. Penney, Macy’s and Sears, claiming they falsely claim merchandise is being discounted in an effort to persuade customers to buy at “an allegedly reduced ‘sale’ price.”

The accusations against Kohl’s and Penney come not long after each settled separate class-action suits in California making similar claims. Penney agreed to a $50 million settlement in November 2015. Kohl’s settled for $6.15 million last spring.

In settling the earlier action, Kohl’s denied it had engaged in false advertising or done anything wrong but agreed to the payment to avoid further dispute and litigation.

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Now, Feuer alleges that Kohl’s continued to mislead customers with its pricing after agreeing in the earlier settlement not to violate California’s specific price-comparison advertising laws.

So-called high-low pricing is common in retail. Basically, it involves setting a reference, or “original” price, then offering the goods at a hefty discount while showing the original price on the sales tag.

Kohl’s is among the field’s leading practitioners and has been targeted by public officials previously for its approach.

Proving that "original" prices are fake can be difficult, but California law is fairly specific about defining an original price. It has to have been the "prevailing market price" within the three months just before the sale.

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In his lawsuit, Feuer cited two items — a pair of men’s cargo shorts, and a caftan maxi dress — for which Kohl’s continued to offer what he alleges were false discounts after the April 2016 settlement agreement in the class-action case.

While the cargo shorts were marketed as having an original price of $60, they never were offered online for more than $35.99 and ultimately were on sale for $18 last month, Feuer alleges.

The dress carried an “original” price of $100 but was first offered online in July at $75, and later at $60 and $40, according to Feuer’s complaint. The dress never was offered for more than $75, he alleges.

A Kohl’s spokeswoman said the company does not comment on pending litigation.