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A New Jersey consumer has initiated a class action lawsuit against The Gap and Banana Republic stores, alleging the retailers use fake purported former prices at their factory stores, misleading customers into thinking they are getting an item at a significant discount.

Plaintiff Michael Pallagrosi filed the complaint seeking damages under California, New Jersey, and Florida law. Specifically, Pallagrosi claims that since 2011, he and other consumers were duped by The Gap and Banana Republic’s “fake” base prices scheme when they made purchases at The Gap and Banana Republic Factory stores.

For example, Pallagrosi says he purchased three pairs of “Camo Sock’s” from a Banana Republic Factory store. The price tag on each “Camo Sock” listed a purported former price of $8.50, but was sold to him at a purportedly discounted sale price of $4.25. According to The Gap and Banana Republic “fake” base prices lawsuit, Pallagrosi believed he was getting items which previously sold for $8.50 each, when in actuality, the socks never retailed for that price.

Moreover, the class action lawsuit contends that what happened to Pallagrosi was not an accident or isolated incident. Rather, it is an alleged uniform policy of The Gap and Banana Republic to use “fake” base prices that are much higher than the prices at which the items in question are actually sold or offer to persuade customers to purchase goods from their factory stores.

California law recognizes that the tactic of using a false comparison prices to lure consumers into believing they are getting a discount is a misleading and deceptive sale tactic. Similarly, New Jersey law prohibits the use of purported discounts and false or deceptive statements regarding former prices to entice consumers to purchase items. In fact, the law requires any statement regarding former prices and purported discounts to be “clear, truthful, and accurate.”

“Neither the federal regulations, nor California law, nor Florida law, nor New Jersey law permits a seller to simply invent a fake former price to use in its advertising. Rather, a purported former price advertised by the seller must be a real price at which [the seller] actually offered the item for sale for a substantial period of time in the recent past,” the lawsuit states.

What this essentially means is that a retailer cannot create a misleading impression in the minds of consumers that the prices of their items have been “discounted” down from the higher fake base prices.

The lawsuit brings charges of alleged fraud and unjust enrichment based on “fake” base prices and seeks to certify a nationwide class of “all persons who purchased any purportedly discounted item from a Banana Republic Factory or Gap Factory store in the United States between October 9, 2011 and the present.” Pallogrosi also proposes to represent two subclasses for New Jersey and Florida consumers.

Pallagrosi and the proposed class are represented by Todd M. Friedman of the Law Offices of Todd M. Friedman PC.

The Gap and Banana Republic “Fake” Base Prices Class Action Lawsuit is Michael Pallagrosi, et al. v. The Gap Inc, et al., Case No. 4:17-cv-05905-HSG in the U.S. District Court for the Northern District of California.

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