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Don't fall for old retail tricks just because you're shopping online

Posted: March 14, 2016 12:09 a.m.
Updated: March 14, 2016 12:09 a.m.
Have you ever thought a sale was too good to be true? That's probably because retailers inflate the list price for items to make you feel like you're getting a better deal than you are. Have you ever thought a sale was too good to be true? That's probably because retailers inflate the list price for items to make you feel like you're getting a better deal than you are.
Have you ever thought a sale was too good to be true? That's probably because retailers inflate the list price for items to make you feel like you're getting a better deal than you are.
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Many Americans are turning to online retailers, not just because of convenience and selection, but because they expect to find a deal.

If it seems like online retailers like Amazon always have sales, that's because they do. In fact, items are on sale so frequently that some have started to question whether the original list price was ever the price at all.

The New York Times explains that the list price is losing its meaning, and in some cases only exists to give shoppers the illusion of a bargain.

The Times gives the recent example of a Le Creuset brand skillet. While listed prices on various websites varied from $250 to $285, all retailers offered the skillet for a "discounted" price of $200.

As it turns out, Le Creuset's own website sells the skillet for the regular retail price of $200. All the other listed prices were inflated to offer a false sale price.

You must be thinking: that seems unfair! Isn't it against the law?

It is — sort of.

The Federal Trade Commission has a guideline about deceptive pricing, reports NBC News, that retailers may advertise a list price as long as it represents a "bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time."

But the FTC has no ruling as to what constitutes a "substantial period of time."

"It's an area of enforcement that's been left to the states," FTC head of enforcement James Kohm told NBC.

Some states have decided to crack down on false advertising, even giving specific timelines for list prices. California, for example, requires that the list price was "the prevailing market price" within the last three months in order for an item to be advertised as "on sale."

That's why there have been a number of class-action lawsuits against retailers in California.

In late 2013, online retailer Overstock.com was sued for $6.8 million in California for falsely inflating its list prices, report The New York Times.

But false sale prices is not a new sales tactic, nor is it unique to online retailers. Traditional retailers have been caught using the same tactics.

In 2014, JC Penney was exposed for its deceptive sales practices after Florida employee Bob Blatchford came forward, reported the Huffington Post.

Blatchford details teams of employees going around the store doubling prices on certain items before a big sale. They would then offer discounts for the sale, but sometimes the discounts were less than 50 percent off.

"Not only was it a fake sale, but they were actually paying more than they would have been previously," Blatchford told HuffPost.

JC Penney has since been sued for running a “massive, years-long, pervasive campaign” of false sale prices and has paid a $50 million settlement to shoppers in California, reports the New York Times.

Competitors like Kohl's and Men's Wearhouse have faced similar lawsuits.

In an even more recent example, MONEY warned against liquidation sales after Sports Authority announced its bankruptcy on Tuesday.

While going-out-of-business sales often boast big savings, in reality they are not the best place to find a deal.

MONEY says that store closings are often handled by third-party liquidation firms, and the liquidator's goal is to make as much money as possible: usually by starting with only small discounts, and increasing savings only as merchandise becomes less available.

For instance, when Borders was liquidated in 2011, 19 out of 25 items examined were actually more expensive than their original prices. When items were discounted, it wasn't by much.

MONEY recommends that if you do go to store-closing sales, compare and price check like you normally would and check price tags to see if they have been tampered with.

Fortunately, online shoppers will largely avoid going-out-of-business tactics and other old retail tricks like the bait-and-switch.

Ironically, the Internet makes it much easier to price-check and validate sale prices. Rather than having to travel from one store to another, shoppers can simply make a few clicks to compare prices.

As consumers wise up to these deceptive advertising practices, online retailers may have to come up with new strategies to keep their attention.

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