Gap, Banana Republic Class Action: Factory ‘Original’ Prices are Fake

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Gap Factory and Banana Republic Factory stores use fake original prices to trick consumers into buying merchandise, according to a New Jersey shopper.

Plaintiff Michael Pallagrosi of Burlington County, N.J. says the pricing strategies at Gap Factory and Banana Republic Factory stores are designed to mislead purchasers into thinking they’re getting a bigger bargain than they really are.

Pallagrosi alleges the “original” prices on these stores’ merchandise are fictitious, used only to make the merchandise’s actual sale prices seem like a better deal.

Both Gap Factory stores and Banana Republic Factory stores are run by subsidiaries of defendant The Gap Inc.

According to this fake sale class action lawsuit, Gap Factory and Banana Republic Factory stores tag their merchandise with “original” prices for which the merchandise was never seriously offered for sale.

These allegedly fake original prices exist solely to contrast with the much lower prices for which the merchandise is offered for sale, Pallagrosi claims. Upon seeing the substantial difference between the sale price and the “original” price, he claims, shoppers get a false impression that the item has been significantly discounted.

That false impression gets consumers to buy more. Pallagrosi quotes consumer research that concludes the perception of a larger discount “enhances [consumers’] perceived value and willingness to buy a product.”

The defendants allegedly play off of these fake sale prices in their promotional materials, according to the fake sale class action lawsuit. Pallagrosi says Gap Factory and Banana Republic Factory stores advertise discounts of “50% Off” their regular price – a regular price that is itself arbitrary, he claims.

“This practice is deceptive and misleading because the advertised percentage-off discounts claimed on such signs – such as ‘50% OFF’ – do not represent an actual discount,” Pallagrosi alleges.

“Rather, the purported percentage–off discount listed on such signs merely represents the difference between the higher fake base price created by Defendants and the lower, purportedly-discounted price at which Defendants regularly sell the item in the normal course of business.”

Pallagrosi says he made multiple purchases between 2014 and 2016 from Banana Republic Factory stores, in reliance on the discounts represented on the merchandise’s price tags. Had he known those discounts were illusory, he says, he never would have bought those items.

Pallagrosi is proposing to represent a plaintiff Class that would cover all persons who purchased a purportedly discounted item from a Gap Factory or Banana Republic Factory in the U.S. since Oct. 9, 2011. He also proposes two subclasses composed of Class Members who made their purchases in Florida and New Jersey.

He seeks a damage award including statutory, punitive and exemplary damages, court costs and attorney fees, all with interest as permitted by law.

Pallagrosi is represented by attorneys Todd M. Friedman of Law Offices of Todd M. Friedman PC and by Stephen P. DeNittis of DeNittis Osefchen Prince PC.

The Gap Factory and Banana Republic Factory Fake Sale Class Action Lawsuit is Pallagrosi v. The Gap Inc., et al., Case No. 3:17-cv-05905-MEJ, in the U.S. District Court for the Northern District of California.