Banana Republic Sued for Advertising “40% Discount”

Overview: Banana Republic frequently features ‘40% off’ sales, and I am a regular customer at the Reno Sparks Outlet Store, however not everyone is as enamored, as the Banana was sued in a class action for advertising 40% off but not also disclosing that not everything in the store was on sale.  The plaintiffs succeeded at the first level of the lawsuit as you will find in this week’s Law Review.

 

My latest favorite new store to get a bargain is the Banana Republic Factory Outlet in the Legends Sparks Marina in Sparks, Nevada.

The last time the Porter family shopped at Banana Republic at Legends, we purchased a lot of clothing (at least for us) at a 40% discount, and on top of that my wife Marianne had a handful of 20% discount coupons.  There’s nothing like reading a sales receipt like this — “Thank you for shopping at Banana Republic, you spent X dollars, you saved 2X dollars.”

Apparently not everyone is enamored with Banana Republic’s seemingly perennial “40% off” sales.

40% Off

Several shoppers at Banana Republic stores were enticed by “40% off” store window advertising and interior signs advertising a 40% discount.

The shoppers, and this is my recollection at the Legends Outlet store, saw the “40% off” sign and did not see any fine print disclosure that the sale price was for “select items only.”

The class-action plaintiffs didn’t discover that the items they had purchased were not on sale until they were at the register where they were embarrassed, then it got ugly as they were given the surprise bad news.

Class Action

The plaintiffs sued Banana Republic under California’s Unfair Competition Law, (UCL), False Advertising Law (FAL) and Consumer’s Legal Remedies Act (CLRA).

The trial court ruled for Banana Republic, concluding the plaintiffs couldn’t recover because at the moment they purchased the items at the cash register they knew the sale price was inapplicable.

The trial court wrote “lost shopping time” is not a sufficient basis to sue.  The shoppers appealed.

Unfair Competition Laws

The UCL prohibits “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising …”

The FAL generally prohibits advertising that contains “any statement…which is untrue or misleading, and which is known, or should be known, to be untrue or misleading…”

The CLRA makes unlawful various “unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer.”

To sue under those laws a plaintiff must document that he/she lost money or property as a result of unfair competition.

Motorcycle Case

The Court of Appeal discussed a similar case where a buyer of a motorcycle was told a price by the salesperson, then when the contract was presented for signing, there were undisclosed dealer-added charges on the total price.

In fact, I remember buying a car and had the same experience:   The price was agreed, but when the paperwork came, there were all sorts of crazy-named surprise charges that I was not happy about:  “Dealer prep,” “transportation fee,” “detail charge,” “boss bonus,” “color preference,” “steering wheel” and more.

The court in the motorcycle case ruled for the shopper/buyer.  I should have hired a lawyer.

Banana Loses

In the end, the California Court of Appeal, Second District, found there was evidence that Banana Republic had advertised “40%” in large type without any other words or disclaimers in small type, and that had induced the plaintiff shoppers, whose claim that they had “lost money” was tenuous perhaps but adequate to keep the case going against Banana Republic.

I’m pretty sure the next time the Porters cruise by Banana Republic and see the “40% off” sign, it will either be a store-wide sale or there will be large-print disclaimers —  “select items only.”

 

Jim Porter is an attorney with Porter Simon licensed in California and Nevada, with offices in Truckee and Tahoe City, California, and Reno, Nevada.  Jim’s practice areas include:  real estate, development, construction, business, HOA’s, contracts, personal injury, accidents, mediation and other transactional matters.  He may be reached at porter@portersimon.com or www.portersimon.com.  

Like us on Facebook.    ©2017

The content contained and opinions expressed in this blog are solely those of the author. This blog contains content and opinions concerning the law generally, and is not intended to constitute legal advice or to create any attorney‑client relationship with the reader. The reader should consult with an attorney about any specific legal issues prior to embarking on any course of action or inaction involving legal matters.