June 19, 2013 at 7:10 AM ET
Bargain shoppers beware: Some major retailers may be misleading consumers with those big sales.
We all love a good sale, and when you see that sign — 20 percent off, 30 percent off, 50 percent off — you assume you're getting a deal. But we found that the sale price may not be a deal at all.
Now, customers are fighting back with class action lawsuits against two of the country's most popular chains.
Two major retailers, Kohl's and J.C. Penney, are now accused of deceiving customers — selling products at regular prices, but calling it a sale.
Attorney Matthew Zevin of Stanley Iola, LLP in San Diego filed the lawsuits.
"We're alleging that that savings is false. It's completely made up by the department store," Zevin told TODAY.
According to the class action suit against Kohl's, those "sales" are nothing more than an "advertising scheme" and a "campaign to mislead consumers." In many cases the regular price is artificially inflated to make the sale price seem even better.
"It induces people to buy those products, and they are just preying on this behavior, and it works," said Zevin.
In fact, our investigation found it's happening at several stores.
One Macy's ad touted a "Cuisinart food processor" with a "regular price" of $139.99 and a "sale price" of $99.99. Sounds like a great deal.
But we checked with the manufacturer, and Cuisinart says that sale price is about what the everyday price should be: $99.95. No real bargain here.
At J.C. Penney, a Dyson vacuum cleaner was listed with a regular price of $725, and a sale price of $649.99 — which was the same as the "full price" suggested by the manufacturer.
"I believe it's very widespread," said Priya Raghubir, a professor of marketing at NYU, who explained that seeing a sale sign has a psychological impact on a customer.
"You feel smart, you feel happy, you've got a great deal, and you feel special because you managed to get this deal," she said. "The stores are completely playing on our emotions."
J.C. Penney and Kohl's had no comment.
Macy's told TODAY it "sets its prices independently. Often, our prices do not coincide with manufacturers' suggested prices."
You may be asking…is this illegal? It's murky.
The Federal Trade Commission has rules on the books saying products have to be sold at regular price for a "significant amount of time" before going on sale. That's sort of vague — and tough to enforce.
In California, where these class action lawsuits are filed, the law is more specific, stating stores must sell the items at the “prevailing market price” for a 3-month period before putting it on sale. The lawyers suing J.C. Penney and Kohl's say that didn't happen here.
So how do you know when a sale is really a good deal? Here's the takeaway. Before you buy anything, ask the store clerk: Was this product ever sold at the regular price? And how long has it been on sale? If it's been on sale for a while, that's a red flag.
And of course, always comparison shop. The "sale price" at one store may actually be cheaper at another.