False comparative pricing futon: issue won’t die
Jordan Marsh Stores Corp has agreed to refund $342,000 to customers in a settlement concerning false comparative pricing. Jordan Marsh was accused of inflating retail prices of futon mattresses and box springs to show customers that its sale prices were a big savings. Massachusetts Attorney General Scott Harshbarger says that "customers have a right to expect that advertised sales offer real discounts."
BOSTON--Comparative pricing is not new to the bedding industry, but it will continue to haunt retailers who do not closely scrutinize their advertising, according to bedding industry executives. Ortho becomes distributor, maker of Kingsdown bedding
The issue again emerged this month when Jordan Marsh on Nov. 1 agreed to refund $342,000 to 6,000 customers to settle accusations that it inflated mattress and box spring prices to appear to offer bigger discounts during sales.
Without admitting wrongdoing, the department store chain, a division of Federated Department Stores, agreed to settle charges by the state's attorney general. Customers will be refunded up to 10 percent of the purchase price of futon mattress and box springs and will not have to file claims.
In a statement issued Nov. 2, the retailer noted, "We deny and disagree with the attorney general on many of the issues involved. We believe, however, that to pursue these matters any further would not be in the best interest of the company or its valued customers."
Such incidents are not widespread and may be decreasing, according to industry executives. John Beggs, president and chief executive of Sealy, noted, "There have been several instances where state attorneys general have either gotten retailers to sign consent decrees or have brought action against them. I would think that would lead to a decrease in that kind of advertising."
David McIlqhuam, vice president of marketing for Sealy, added, "I think the retail community has been dealing with this issue for years and it doesn't seem any more prevalent today than it was five years ago. What is more prevalent is retailers abandoning comparative pricing and going to everyday low pricing as a means of avoiding these problems." New Hillside name reflects
Another bedding industry executive, however, questioned whether comparative pricing would disappear altogether. "Most dealers abide by state and federal laws, but once in a while you've got the exception. Comparisons are a very pervasive form of advertising that the customer seems to want. It seems to be lessening, but I'm not naive enough to think it's going to disappear."
In the Jordan Marsh case, state attorney general Scott Harshbarger accused the retailer of pricing items up to five times wholesale costs--certain models were tagged up to $3,300. He said one flagship bed with a wholesale cost of $480 was advertised at a sale price of $999 compared with an everyday price of $2,400.
Harsharger said the retailer sold "few or none at the inflated price," instead relying on 50-percent-off and other types of promotions. It is illegal in Massachusetts and many other states to compare sale prices with fictitious or exaggerated prices.
He also alleged the retailer did not maintain everyday prices for 14 days prior to a sale, extended sales beyond expiration dates and failed to maintain sales records required by state law.
The retailer agreed to turn over those records semiannually for one year, to refrain from making false savings claims, to refrain from inflating prices and advertising false discounts and to sell bedding at everyday prices at least 55 percent of the time. The settlement also calls for the retailer to contribute $38,000 for a student mediation program designed to reduce inner-city violence.
Said Harshbarger: "Consumers have a right to expect that advertised sales offer real discounts. When Jordan Marsh put futon mattresses on sale at half price, consumers thought they were getting a great deal. What they really got most times, we believe, was over-priced bedding brought down to what would be considered a full regular price at other stores." http://futonszone.com/dial-mattress-rousing-lazy-bed-buyers/
Tom Samoluk, director of communications for the state attorney general's office, said while allegations "went beyond mattresses, the evidence was the strongest in the mattress department. The markups for the most part were extraordinary."