Zara Accused Of Duping Customers In Massive Bait And Switch Pricing Scam

Market News

Zara Accused Of Duping Customers In Massive Bait And Switch Pricing Scam

1. A US$ 5 million class action lawsuit against clothing company Zara accuses the retail giant of 'deceiving' American consumers into paying 'well in excess' of price tag amounts

2. The lawsuit states that the 'fraudulent' pricing practices have been used across the US, enriching Zara to a tune of billions of dollars

4. According to the suit, Zara USA Inc tags clothing only in Euros, which is itself confusing to many consumers, and lures them to the register

5. In some instances, the suit claims, the Euro price is covered with a dollar sticker on the price tag

6. But the suit claims products are sold well in excess of the true converted amount, if it were to be converted using that day's foreign currency rates

7. The group currently has 71 Zara stores in the United States.

Clothing company Zara has been accused of duping millions of American consumers in a massive pricing scam, according to a US$ 5 million class action lawsuit, reports Daily Mail Online.

According to the report, the suit alleges that the Spanish retail giant 'deceived' US consumers through classic 'bait-and-switch' pricing that leads to people paying 'well in excess' of the tag amount.

It states that the 'fraudulent' pricing practices have been used across the US, enriching Zara by billions of dollars. The suit was brought by high profile Los Angeles lawyer Mark Geragos whose firm carried out an investigation into Zara's 'unlawful' pricing practices and says the clothing firm perpetuates the 'deception' in two ways. According to the suit, Zara USA Inc tags clothing only in Euros, which is itself confusing to many consumers, and lures them to the register. But to make matters worse, the suit claims, not only is the same product sold for a substantially higher amount in dollars, but the product is always sold well in excess of the true converted amount, if it were to be converted using that day's foreign currency rates.

This dodgy practice is known as 'bait-and-switch' in the fashion industry. The second 'deception', according to the suit, is the practice of 'cover-up pricing' - where the Euro price is covered with a dollar sticker. In those instances, the suit claims, the dollar amount is almost always applied in the form of a pricing label stuck over the euro price printed on the tag.

The suit claims the dollar amount is way above the true converted amount if the euro price were properly converted to dollars. According to the 26-page suit, Zara is violating State and Federal law by luring consumers to the register by using these confusing foreign currency tactics and then duping them into thinking they are paying less. In fact, Zara is slapping a huge mark-up on the price without telling the consumer, the suit claims.

The suit states: 'Zara's practice of assuring consumers that the discrepancy between the tag price in euros (€), and the dollar ($) price at the register is merely the result of an appropriate application of the conversion rate from euros to dollars.

'In fact, the conversion rate is entirely misapplied - to the extent it is even applied at all - such that US consumers are paying far more than the true prices of the products.'

The legal documents go on to allege that Zara has also 'perpetuated a corporate policy of misinforming consumers' who do ask why the cost of clothing they bought is more than the tag price.

Zara customers are told that the mark-up is based on a conversion rate at the time the clothing was manufactured - which is false, the suit claims. The suit was filed in California by law firm Geragos & Geragos on behalf of a man called Devin Rose and potentially millions of other customers against Zara USA Inc.