Recently, I’ve gained a little weight and have put on a few inches around my waist.  A few months ago, I was going out and needed to dress up a little bit, so I picked out a pair of slacks from my admittedly limited selection.  They didn’t fit, and neither did the next pair…so it was time to go pants shopping. I went to a department store to get some pants, and as I went from one clothing rack to the next, I started noticing something odd.   Pretty much everything was on sale, and the discounts weren’t trivial, most things were on sale for 40%, 60%, even 70% off.  

Being a sceptic, I checked the “original” prices, which seemed higher than anyone in their right mind would pay, and I also came back a couple of other times over the next couple of months to see if everything was still on sale.  Not surprisingly, each time I checked in at the store, basically everything was still being offered at a deep discount. So what’s the deal? Are these really sales, or is this just deceptive advertising?

WHAT MAKES THE SALES FAKE?

The practice of always having an item on sale is a well known marketing problem, and department stores are notorious for this.  They display an original price and then the drastically marked-down sale price. The only problem is that frequently, the original price is essentially fabricated and the item is never offered at such a high price.  This gives the customers the false impression that they are saving big money, when in fact, the price that they are paying is pretty much just the regular price for that item. Along with bait-and-switch sales, this is one of the most common types of fraudulent sales.

WHO IS ADVERTISING THE FAKE SALES?

According to a study by Consumers’ Checkbook, many retailers are guilty of falsely advertising sales in this way.  The researchers tracked the prices of 20 items at 19 major national retailers for 44 weeks. They were evaluating the prices to see how much of the time the items were on “sale” and if they were ever being offered at the advertised “original price”.  The study found that sales are usually misleading at a number of retailers, including: JCPenney, Kmart, Kohls, Macy’s, Neiman Marcus, and Sears.  In fact, both Neiman Marcus and Sears had a number of items that were on sale constantly for the whole 44 week period of the study!

WHAT ARE THE RULES?

The Federal Trade Commission does have rules about what counts as a sale price.  They say that, in order for a retailer to claim that an item is being offered at a reduced price, the higher “original” price must be: “a bona fide price at which the item was offered to the public on a regular basis for a reasonably substantial  period of time”. It seems ridiculous that a definition of this sort is needed at all.

There have been many major retailers who have been sued for wrongfully reporting the “original price” in deceptive sales, including: Amazon, overstock.com, Neiman Marcus, Ann Taylor, Michael Kors, and JCPenney.  To avoid getting into trouble, many stores now advertise their sales differently than before. Instead of seeing “was $49.99” on the tag, stores usually write something more like “compare at $49.99”. This is obviously a meaningless change to avoid legal issues.

WHAT SHOULD YOU DO ABOUT IT?

Never assume that a sale is legitimate, the store probably sells the item at the “sale” price most of the time.  So make sure you shop around, and if you find that the sale price you see is pretty typical, then you know that the item is not really on sale.  Make sure you look for online prices and ask the retailer to match that price. Remember that most likely, nobody has ever paid the “original” price for the item, and the store doesn’t expect you to pay it either.  

Remember to always be an informed, sceptical shopper and don’t let shady marketers take advantage of you.

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