Liability For Fake “Bargain” Pricing Under Washington’s Consumer Protection Act
Washington State’s Unfair Business Practices Act, commonly referred to as the Consumer Protection Act, or “CPA,” generally makes it unlawful for people or businesses to engage in unfair or deceptive acts or practices in the conduct of any trade or commerce. It can be a powerful tool for consumers to get justice. Generally speaking, to establish a cause of action under the CPA, the aggrieved plaintiff must establish: (1) an unfair or deceptive act or practice; (2) that the act or practice occurred in the conduct of trade or commerce; (3) that the act affects the public interest, in that it either violated a statute incorporating the CPA, or violated a statute with a specific legislative declaration of public interest impact, or injured or had the capacity to injure other persons; (4) that there was injury to the plaintiff’s business or property; and 5) that there is a causal link between the unfair or deceptive act and the injury suffered by the plaintiff.
A recent Washington Supreme Court case explored the fourth element above, in Montes v. SPARC Group LLC. There, the plaintiff, Montes, filed a class action lawsuit against the clothing company Aeropostale, based upon the CPA. Montes asserted that Aeropostale advertised leggings as being on sale for $6. The price tags on the leggings showed a struck out price of $12.50, suggesting that the higher price was the normal price which they sold for. Montes essentially argued that she had been tricked into purchasing the leggings on the false representation that their true value was the supposedly normal price of $12.50. In reality, Aeropostale rarely if ever sold the leggings for the higher price. Montes alleged that she and the class plaintiffs suffered injury because they would not have purchased the items at the prices they paid had they known the items had not been regularly offered at the higher list price; that they suffered injury because they “did not enjoy the actual discounts” which Aeropostale represented and promised them; and that the “paid a price premium due to illegitimately inflated demand resulting from Aeropostale’s deceptive pricing scheme.
As the case was filed in federal court and went up on appeal, the 9th Circuit Court of Appeals eventually referred the case to the Washington State Supreme Court to get clarification on its interpretation of the CPA. The federal court asked the specific question: “When a seller advertises a product’s price, coupled with a misrepresentation about the product’s discounted price, comparative price, or price history, does a consumer who purchases the product because of the misrepresentation suffer an ‘injur[y] in his or her business or property’ under [RCW] §§ 19.86.020 and 19.86.090 if the consumer pays the advertised price?”
The Supreme Court answered no to this question, and held that, “Without more, a plaintiff who alleges that she purchased a fungible consumer product at its advertised price because of a misrepresentation about the product’s discounted price, comparative price, or price history, has not alleged that she suffered a cognizable injury to her business or property.” The Court reasoned that Montes did not claim that the leggings were worth less than the $6 which she paid, nor did she claim that the leggings she received differed in any objective way from the leggings she saw advertised. Stated another way, Aeropostale’s alleged misrepresentation “did not relate to any objective quality of the leggings.” “A seller’s abstract claim about value does not create an objective difference between two otherwise identical fungible items.” The Court characterized Montes’s claimed injury as mere “dashed expectations” which do not count as “business or property” under the CPA. The Court also rejected Montes’s “price premium” theory, that the deceptive pricing caused the actual sales price to get inflated, based upon false consumer perceptions of true value. But a fatal flaw in Montes’s case was that she had previously taken the position in court that the leggings were worth what she paid for them. In summary, Montes got what she paid form, even if there was deception by Aeropostale. The decision did not foreclose the possibility of action by the Washington State Attorney General, who would not have to prove either causation or injury in prosecuting CPA violations.
The lawyers at Beresford Booth have experience handling CPA claims. We would be happy to counsel or represent you, whether you are a prospective plaintiff or defendant.