Like many department stores in the U.S., J.C. Penney has not had an easy past few years. Even with the economic recovery gaining momentum, the department store segment continues to underperform – especially in the face of eCommerce competition.
Now, J.C. Penney has another problem to worry about. Earlier this week, a federal judge in Los Angeles certified class action status for a group of plaintiffs suing the department store chain for bogus discounts. According to reports, shoppers are claiming that the company advertised sales on products that did not actually have a discount.
The plaintiffs describe the alleged scheme as a “massive, years-long, pervasive campaign” that misled shoppers about its pricing practices. On Monday (May 18), U.S. District Judge Fernando Olguin certified class action status for the plaintiffs, declaring that it is possible to determine “in one stroke” whether J.C. Penney advertised fake discounts.
The class is spearheaded by shopper Cynthia Spann, who claims that she purchased three items for $17.99 each that were advertised as being discounted by 40 percent off from the original price of $30. According to Spann, however, the shirts were never actually priced above $17.99 in the three months prior to the purchase.
Consumer protection regulations from the Federal Trade Commission require stores to sell items at their original costs before marking them down if they want to promote a sale by showing what that original cost was.
Legal representatives from either side did not respond to requests for comment by reporters. According to reports, the class contains J.C. Penney shoppers who purchased items at discounts of 30 percent or more in California between Nov. 5, 2010 and Jan. 31, 2012.
Earlier this year, J.C. Penney revealed that it planned to close 40 stores following the 2014 holiday shopping season, a plan that sees nearly 4 percent of its locations going out of business in 2015.
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