Reuters
- UK retail giant Boohoo has agreed to pay $197 million to settle a California class-action lawsuit.
- The retailer was accused of falsely listing items as marked down even though they were never sold for the original price.
- The money will be distributed to over 9 million plaintiffs living in California.
Fast fashion retailer Boohoo will pay millions to setlle a class-action lawsuit alleging the company promoted its products using fake discounts.
The UK-based company — including its PrettyLittleThing, NastyGal, and boohooMAN brands — was hit with the lawsuit in May 2020, claiming the retailer broke California laws by displaying garments as marked down even though they'd never been sold for the listed original price.
Boohoo announced it would settle the case for $197 million in April, but without admission of guilt, according to the claims administrator, KCC Class Action Services. Those eligible to receive some of the settlement include California residents who purchased products from the Boohoo brands between April 2016 and June 2022.
"Defendants deny all of the allegations made in the Actions. The Court has not determined who is right," a statement from KCC Class Action Services read. "Rather, the Parties have agreed to settle the lawsuits to avoid the uncertainties and expenses associated with ongoing litigation."
The money will be split among over nine million individuals in the form of gift cards. There will be an estimated 11.3 million gift cards distributed, and each card will have $17.45 for whichever Boohoo-owned brand the consumer shopped at, Business of Fashion reported.
Advertising and e-commerce lawyer Robert Freund took to Twitter to break down the suit's allegations that Boohoo violated the Federal Trade Commission Act.
"Using fake reference prices to run sales is illegal under the FTC Act and California's laws," Freund wrote. "The FTC rule says a former price needs to be 'the actual, bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time.'"
—Rob Freund (@RobertFreundLaw) April 5, 2023
He continued: "Probably hundreds of these cases have been filed. Certainly, hundreds of demand letters have been sent. If a brand hasn't been sued for it yet, they either will be, or they're just lucky."