Udemy’s False Sale Pricing Scheme Misleads and Damages Consumers, Distorts Market, Class Action Alleges

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Udemy Courses Pricing Class Action Lawsuit Overview:

• Who: Online course provider Udemy is being sued by a customer over its pricing.
• Why: The customer alleges Udemy set false reference pricing for courses that were marked as being on sale, misleading customers into thinking the sale prices were a better deal than they truly were.
• Where: The nationwide class action lawsuit was filed in federal court in Northern California.

Udemy.com’s deceptive business practice of advertising fictitious original prices and corresponding phantom discounts on its online instructional courses has misled and damaged consumers and continues to distort markets, a new class action lawsuit alleges.

The nationwide class action lawsuit was filed in California on August 23 by lead Plaintiff Marion Williams who alleges that Udemy’s “false and misleading marketing, advertising, and pricing scheme” violates California and federal laws, which prohibit the advertisement of goods for sale discounted from former prices that are false.

According to the class action lawsuit, Udemy engages in false reference pricing, which is when a seller fabricates a false “original” price for a product, then offers that product at a substantially lower price under the guise of a sale.

“The result is an artificial price disparity that misleads consumers into believing that the product they are buying has a higher value than has been established by the market and induces them into making a purchase,” the claim reads.

The practice artificially inflates the true market price for a product by raising consumers’ reference price, enabling retailers to sell products above their true market price and value — with consumers are left to pay the price, the claim states.

Williams had investigators track the pricing of certain courses offered for sale through Udemy.com at various points from 2019 to 2021, the claim says. Those investigations found that the course Williams purchased was priced with a false reference price and a corresponding discounted price for at least the 90-day period immediately preceding his purchase.

Williams bought “AWS Certified Solutions Architect – Associate 2020” from Udemy’s website in September 2020. He says that he purchased the course due to the sale price, of $12.99 when it was advertised as having an original price of $94.99.

“Plaintiff was damaged in his purchase because Defendant’s false reference price discounting scheme inflated the true market value of the item he purchased.”

The claim alleges that products sold on Udemy.com are never offered for sale, nor actually sold, at the advertised reference price.

“Thus, the purpose of these advertised reference prices is to induce consumers into believing that the products were once sold at the reference price and will be again if the consumer does not act fast in purchasing at the ‘bargain’ price.”

The class action lawsuit alleges that Udemy and other retailers use the illegal tactic because they know they will be able to increase sales and profits by tricking consumers into making purchasing decisions based on the advertised reference prices.

The claim says that the deceptive advertising plays into a consumer’s decision-making process through three avenues: that a product’s price is also used as an indicator of product quality; that reference prices appeal to consumers’ desire for bargains or deals; and that consumers place some value on the psychological experience of obtaining a product at a perceived bargain.

“Sellers are well aware of consumers’ susceptibility to a bargain, and therefore have an incentive to lie to their customers,” the claim states.

Williams wants to represent anyone in the U.S. who has bought something off Udemy.com at a sale price in the last four years. He is suing for violations of California’s Consumers Legal Remedies Act, False Advertising Law, and Unfair Competition Law. He seeks monetary damages, restitution, declaratory and injunctive relief, and a jury trial.

Let us know in the comments section if you’ve bought anything from Udemy.com because of the listed sale price!

Williams is represented by Todd D. Carpenter and Scott G. Braden of Carlson Lynch LLP.

The Udemy Courses Pricing Class Action Lawsuit is Williams v. Udemy, Inc. Case No. 3:21-cv-06489 in the U.S. District Court Northern District Of California.

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