Zara USA faces US$5m deceptive pricing lawsuit
Fast fashion retailer Zara USA has been hit with a US$5m lawsuit that claims the chain has been allegedly duping US consumers with misleading price tags.
The Inditex-owned company is under fire for supposedly using deceptive pricing practices such as "bait and switch pricing," drawing in consumers with tag prices in euros, only to inform them at the cash register that the true dollar prices are much higher.
The lawsuit, filed on Friday (19 August) by Devin Rose in the United States District Court for the Central District of California, claims the chain also uses "cover-up pricing," affixing labels bearing inflated dollar prices over the euro prices actually printed on the products' tags.
When contacted by just-style, a spokesperson for Zara USA said the company "vehemently denies any allegations" that it engages in deceptive pricing practices in the US.
"While we have not yet been served the complaint containing these baseless claims, we pride ourselves in our fundamental commitment to transparency and honest, ethical conduct with our valued customers," the spokesperson said, adding: "We remain focused on providing excellent customer service and high-quality fashion products at great value for our customers. We look forward to presenting our full defence in due course through the legal process."
Rose, who is represented by Geragos & Geragos, claims Zara's deceptive pricing practices caused him to overpay for three shirts purchased from a Zara retail store in Sherman Oaks, California, in May. The lawsuit states Rose was "drawn in by the low cost of these garments", each having displayed a price of EUR9.95 on its tag. But to his "dismay", Rose discovered he had actually been charged $17.90 for each shirt.
According to the filing, when Rose questioned the cashier about this discrepancy, he was told that the price difference was due to the conversion rate between euros and dollars. Yet, Geragos & Geragos argue at the time of the purchase, the actual euro-dollar exchange rate would have resulted in the EUR9.95 shirts costing approximately $11.26 each. Instead, Zara charged Rose $17.90 per garment, a markup of nearly 60%.
Should Zara USA be found guilty of the allegations, it will be in violation of state and federal law by "luring consumers to the register with perceived lower prices using a foreign currency and surreptitiously imposing an arbitrary markup without making an appropriate, or any, disclosure to the consumer".