Ann Taylor Class Action Alleges Fake Markdowns

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A proposed class action lawsuit was filed against the operators of Ann Taylor factory and outlet stores over claims of illegal price scheming.

Specifically, the complaint alleges that the market prices were artificially inflated and were never the original prices for the items. In addition, the market prices were not the prevailing market prices within the three months immediately before the advertisement, as required by various state laws, according to the lawsuit.

Plaintiffs Siobhan Morrow of California and Ashley Gennock or Pennsylvania filed the proposed class action lawsuit in New York district court accusing Ascena Retail Group Inc. and Ann Inc. – the operator of Ann Taylor Factory stores and Ann Taylor Loft Outlet stores – of using misleading labels on merchandise sold in their outlet stores which ultimately tricked consumers into thinking they were getting a bargain.

Morrow and Gennock state the defendant misled consumers by advertising clothing, shoes and fashion apparel at discounted, savings prices, but the original market prices were allegedly artificially inflated and were not the original prices of the products sold at the defendants’ retail outlet stores.

In November 2015, Morrow say she purchased a pair of pants at the Ann Taylor Factory Store in San Diego, Calif. that were allegedly on sale for $39.99 with a sales tag and in-store display representing the item as 50 percent off.

However, when she researched the price of the pants she discovered the item was never sold at full price of $79.99 to begin with, nor within the 90-day time period immediately preceding Morrow’s purchase.

Similarly, Gennock purchased several items in April 2016 at both the Ann Taylor Factory Store and Ann Taylor Loft Outlet stores in Grove City, Penn. Gennock alleges that the clothing items were marked as 50 percent and 40 percent off, according to the price tags and related in-store signage.

According to the lawsuit, Gennock claims that the price of the items she bought were actually the regular or MSRP cost and not sold or intended to be sold at a discount.

Both Morrow and Gennock say they would not have purchased the items or paid the amounts they did, had they known the items’ actual retail value.

The advertising and marketing of merchandise is regulated in the U.S. by the Federal Trade Commission (FTC), which states that a store’s products must be openly and actively sold at the regular price for a “reasonably substantial period of time” before being discounted.

In the last couple of years, well-known brands and retailers have been sued for deceptive pricing in outlet and factory stores that violates consumer protection laws.

In addition to Ann Taylor, chain stores spanning J.C. Penney and Kohl’s to T.J. Maxx, as well as the outlet arms of Michael Kors and Kate Spade, have been hit with a wave of consumer class action lawsuits filed by disgruntled shoppers who claim that they were duped into making purchases because of fake sale prices.

On top of urging the court to bar Ann Taylor from continuing these practices, Morrow and Gennock are seeking damages and restitution in excess of $5 million on claims of unfair and fraudulent business practices and false advertising on behalf of themselves and a nationwide Class of consumers all similarly situated.

The plaintiffs are represented by Joseph P. Guglielmo and Erin Green Comite of Scott+Scott; and Todd D. Carpenter, Edwin J. Kilpela and Gary F. Lynch of Carlson Lynch Sweet Kilpela & Carpenter.

The Ann Taylor False Advertising Class Action Lawsuit is Siobhan Morrow and Ashley Gennock v. Ascena Retail Group Inc. and Ann Inc., Case No. 1:16-cv-03340-JPO, in the U.S. District Court for the Southern District of New York.

UPDATE: On Dec. 14, 2017, Ann Taylor agreed to pay $6.1 million to settle class action claims that the clothing retailer used fake discount prices to dupe consumers into thinking they were getting deals at outlets and factory stores.

UPDATE 2: January 2018, the Ann Taylor fake discount class action settlement is now open. Click here to file a claim.

UPDATE 3: On Oct. 15, 2018, Top Class Actions viewers started receiving checks in the mail from the Ann Taylor fake sale class action settlement worth $6.84. Congratulations to everyone who filed a claim and got PAID!