New York & Company Class Action Says Shoppers Tricked by ‘Phantom’ Sales

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New York & Company Inc. was hit with a class action lawsuit alleging the clothing retailer creates false “% Off” prices to dupe consumers into thinking they’re getting a deal.

Plaintiff Alyssa Hedrick says she was tricked into thinking she got a discount on clothing she purchased from a New York & Company outlet store because the price tag included a statement that said “Our Price” and a corresponding “phantom ‘% Off.’”

The plaintiff argues that the “Our Price” prices are never offered to the general public, or are only offered for a short time, and are continuously discounted, making the supposed “Our Price” misleading.

Hedrick alleges that in April of 2016, she purchased a top for $13.47 from a New York & Company outlet store. According to the plaintiff, she thought she was getting a discounted item that would sell for $24.95 in regular stores because that was the price listed as “Our Price” on that tag. The tag also claimed the top was “40% Off.” Hedrick alleges that after researching her purchase she discovered that the top she bought had never been sold at a regular New York & Company retail store and had never been sold for $24.95.

“The advertised discounts were nothing more than mere phantom markdowns because the represented ‘OUR PRICE’ prices in the outlet stores were artificially inflated and were not the predominant prices at which Defendants offered for sale or sold their outlet store products,” the New York & Company class action states.

The plaintiff alleges that the prices listed as “Our Price” in the discount stores are nothing but a sham. According to her investigation, she alleges, New York & Company never listed the products sold at the discount stores at the “Our Price” prices.

Instead, says the plaintiff, New York & Company is using a deceptive pricing scheme through in-store signage ostensibly offering steep discounts. According to the class action, the clothing retailer places large signs at its discount outlets displaying their pricing scheme and advertising deep discounts.

“The ‘OUR PRICE’ price is never actually the ‘regular’ or market’ price for the goods sold at the outlet stores; rather, it is a fictional price from which Defendants offer deep discounts to lure consumers into believing they are receiving a substantial discount,” alleges the plaintiff.

In fact, says Hedrick, a whole different line of clothing is sold in the New York & Company outlet stores than what is in their traditional retail stores. “By commonly offering 30%-50% off the ‘OUR PRICE’ price tag in their outlet stores, Defendants create the false impression that consumers are getting goods traditionally sold in the New York & Company retail stores, when in fact they are purchasing clothing that Defendants manufactured specifically for their outlet stores,” the class action claims.

The plaintiff alleges that New York & Company’s deceptive marketing in its outlet stores violates California advertising and consumer protection laws.

Hedrick seeks to represent a Class of California residents who purchased items from a New York & Company outlet store since June 9, 2013. The plaintiff is seeking damages, an injunction and a corrective advertising campaign as well as disgorgement by New York & Company of all profits from its allegedly deceptive marketing scheme.

The plaintiff is represented by Todd D. Carpenter, Edwin J. Kilpela, and Gary F. Lynch of Carlson Lynch Sweet Kilpela & Carpenter LLP.

The New York & Company Deceptive Marketing Class Action Lawsuit is Hedrick v. New York & Company Inc., et al., Case No. 3:17-cv-01153-AJB-JMA, in the U.S. District Court for the Southern District of California.