Kate Spade Class Action Alleges Fake Discount Scheme

Fashion retailer Kate Spade has been hit with a class action lawsuit stemming from claims that the company violates the law by engaging in false sale schemes.

Plaintiff Janice Goldman says that in October 2016, she shopped at Kate Spade’s outlet store in Missouri and purchased two Winni handbags that had a regular price of $199 each, but which could be purchased for 60% + 20% off, or $63.68 each.

Goldman claims that the higher advertised prices of each item she purchased were false and misleading because they did not represent the actual, bonafide prices at which the defendant had recently offered to sell those same products for a reasonable period of time preceding her transaction.

She states that the actual fair market value of each item at the time of her purchase was lower than the higher advertised regular price. Thus, the plaintiff suffered monetary damages because she did not receive products worth the higher value that the defendant represented she would receive through their false comparison pricing scheme.

“Defendants have not sold substantial quantities of the lower-quality products offered in their Outlet stores at the higher advertised comparison prices in the recent past, nor have they offered to sell such products at those higher comparison prices for a reasonable and substantial period of time preceding the advertised discounts,” the Kate Spade class action lawsuit states.

As a result of the defendant’s actions, Goldman says she has not received the benefit of the bargain that the defendant promised because the items that she purchased do not have a higher value and worth than what was represented.

The plaintiff also maintains that Missouri law prohibits a seller from advertising a price comparison when the product being advertised materially differs in composition, grade, or quality, style or design, from a comparative product.

Goldman says false price comparisons are an effective way to sell products that consumers would not otherwise purchase, to sell more products than customers would not normally purchase, or to sell products at higher prices than would otherwise occur absent the false price comparison.

“Indeed, numerous studies show that consumers are much more likely to purchase an item if they are told that it is being offered at a price that is less than the price at which the seller recently sold the product,” the Kate Spade class action lawsuit goes on to say.

Thus, consumers are more likely to purchase an item if they think it is worth more than what they are being asked to pay for it, Goldman says.

The plaintiff maintains that Kate Spade has routinely and consistently violated Missouri’s prohibition against false price comparisons. And, she claims she was exposed to and suffered damages as a result of the defendant’s false price comparison. 

Goldman explains that the advertised Kate Spade price reductions, percentages off and discounts are illusory because the higher prices reflected on the defendant’s price tags do not represent prices at which the defendant has recently sold in substantial qualities the same products. 

She says that the products sold at the Kate Spade Outlet stores are sold exclusively at the Kate Spade Outlet stores and that they are always sold at a price substantially below the higher advertised comparison price.

The plaintiff states that Kate Spade has violated Missouri law by failing to disclose the basis of the price comparison and failing to disclose that the items sold at the defendant’s high-end retail stores are materially different and superior products than those items sold at the outlet stores.

“Since the higher prices represented on Defendants’ price tags do not reflect and materially overstate the actual market value and worth of the products sold in Defendants’ Outlet stores, consumers like Plaintiff and the Class who buy these products suffer damages and do not receive the benefit of the bargain Defendants promise them,” the Kate Spade class action lawsuit notes.

This is not the first time that Kate Spade has been sued related to false comparison discounts. In April 2019, the company was sued by a customer who claimed their reference price comparisons were a sham and that the prices of the items do not represent the real non-discounted price of the item.

Also, in February 2019, a class action lawsuit was filed against Kate Spade by a customer who claimed she was tricked into thinking she received a discount at one of the stores, because of false reference pricing.

Do you shop at Kate Spade and think you were given a false discount? Leave a message in the comments section below.

The plaintiff is represented by Robert D. Blitz and Christopher O. Bauman of Blitz Bardgett & Deutsch LC, Matthew Zevin and Scott A. Kitner of the Stanley Law Group, and Daniel B. Sivils.

The Kate Spade Price Comparison Class Action Lawsuit is Janice Goldman v. Tapestry Inc., et al., Case No. 4:20-cv-00748, in the U.S. District Court for the Eastern District of Missouri.

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