Boohoo settles £156m court case over fake discounting
Boohoo has settled a staggering £156m US court case in which the fast fashion giant was accused of faking discounts for customers.
The Manchester-based online retailer, which also owns Pretty Little Thing and Nasty Gal, was accused of engaging in a “deceptive pricing scheme”, with the court filing claiming Boohoo would falsely raise the full price of its clothing in order to make discounts appear greater.
“Plaintiffs allege defendants routinely marked down and discounted these inflated prices, which gave customers the false impression that they were getting a deal or bargain,” a statement from KCC class action services said.
While Boohoo has denied all allegations, it has agreed to settle the lawsuit to avoid the “uncertainties” and “expenses” associated with ongoing litigation, KCC also said.
It is understood those impacted by Boohoo’s behaviour will be rewarded with a $10 gift card and free shipping.
“The Boohoo family websites, including Pretty Little Thing, Nasty Gal and Boohoo Man, are now required to include a disclaimer that the product prices listed as ‘reference’ prices are not based on the original prices for the products,” Nick Drewe, a retail expert at online discount platform Wethrift reported.
“It’s not uncommon for brands to list ‘fake discounts’ on their websites, especially across big saving events such as Black Friday, Cyber Monday and the end of season sales. Unfortunately, buyers often fall victim to these marketing tactics and will purchase items at a ‘discounted’ price, despite the offer not being as exclusive or real as it appears to be.”
He added: “Brands use this ‘fake discount’ marketing method to dupe customers into thinking they’re grabbing a great saving. But as more people become aware of this tactic, the credibility of sales events lessens, resulting in customers losing trust in big named brands.”
The news comes as the latest blow to Boohoo, which has seen its share price fall by almost a third over the last year as squeezed consumer budgets cut into sales.
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