Feedback
Business

Fake’ Sales Trick Customers at Major Stores, Study Says

A shopper looks for clothes in a Miami store. Joe Raedle / Getty Images file

It's hard to resist a good sale. See something that's 40 or 50 percent off and you may want to grab it before the price goes back to normal. Retailers know that.

But is that "sale" price really a special, reduced price?

Not always, according to a new study by the non-profit Center for the Study of Services, also known as Consumers' Checkbook. They concluded that some well-known stores seemed to have perpetual sales on certain items, so the "discounted" price is really the regular price.

"We believe that whenever a store has something that's offered at a sale price for more than half the time, they're misleading their customers. And in the case of Sears and Kohl's and often Macy's, it's almost all the time," said Kevin Brasler, Checkbook's executive editor. "They're using the illusion of deep discounts to keep people from shopping around."

Sears and Macy's challenge the group's study and conclusions. Both companies told NBC News they comply with all laws and regulations and work hard to offer their customers good prices. Kohl's did not return multiple requests for comment.

What they did

Researchers tracked the prices of six to 10 big ticket items at seven national chains - Best Buy, Costco, Home Depot, Kohl's, Macy's, Sears and Target for 44 weeks starting in June 2014. Most of the price checks were done online, but spot checks of in-store prices were also conducted to make sure they matched those offered online. (Read the full report Sale Fail, including survey results for each store.)

Some of the stores did run valid sales - limited-time price reductions on the selected merchandise. But Brasler said Sears, Kohl's and Macy's offered what he called "fake" sale prices.

"It's shameful what they're doing," Brasler told NBC News. "They're making it appear that this is a special low price, when in fact, it's always their price. And often, it's not even a low price, if you took the time to compare."

Key findings:

  • Sears had what Checkbook called "the most egregious always-on-sale practices." Eight out of nine items tracked, were almost or always on sale. Two were on sale 44 out of 44 weeks.
  • Kohl's had eight of the nine items checked on sale more than half the time during the 44-week survey period. Four were always or almost always offered at sale prices.
  • Macy's had one item almost always on sale and four that were on sale 70 percent or more of the time. Two items Checkbook monitored never went on sale.

"Sears disagrees with any suggestion that its pricing is misleading or deceptive," the company wrote in a statement. "Sears is focused on providing its members with great prices on a wide variety of products and services."

"We do not publicly discuss the details of our pricing strategy," Sears said in its statement. "While we cannot speak to other retailers' pricing behavior, as a multi-channel, leading integrated retailer we are uniquely positioned to provide discounts to our members and customers in a number of different, legally compliant ways, including things like member pricing, store or online only promotions, clearance offers, and offers from third-party marketplace sellers. It is unfortunate that Checkbook.org did not appear to take these factors into account before making its assumptions."

Macy's statement said pricing for each item is based on a number of factors, including the nature and seasonality of the merchandise, and customer response. "Some items rarely go on sale prior to final clearance; others go on sale more frequently as part of promotional events," the company wrote.

Macy's also pointed out that the items in the study "were not monitored every day. In most cases, the data seems to have been collected at one specific point each week - every six or seven days. And in the summary chart, columns are labeled 'number of weeks' and 'percentage of weeks on sale.' Macy's, however, promotes by day, not by week - so a weekly snapshot does not give you a complete and accurate picture. Price may vary within the course of a week."

To that, Brasler responded: "It's possible Macy's had items on sale on the days we didn't check, but we believe our survey method is accurate and fair."

Aren't there laws about this?

The Federal Trade Commission does have rules about false, misleading and deceptive advertising. In its guidelines against deceptive pricing, the commission tells retailers that a product can be advertised as being sold at a reduced price if the former price was "a bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time."

James Kohm, head of the enforcement division at the Federal Trade Commission (FTC), told NBC News there are no specific federal rules about how long a sale can run.

"It's an area of enforcement that's been left to the states," Kohm said.

Some states do have laws that spell out how long an item can be on sale before it must go back to the regular price. It's also illegal in many states to claim to offer a discount on products which have rarely, if ever, been offered at the higher price claimed.

"It's sad, but even in states with good consumer laws, few Attorneys General bring these kind of cases," commented Edgar Dworsky, founder of ConsumerWorld.org, and a former Assistant Attorney General in Massachusetts.

The bottom line: You can never assume that a sale price is a good price. The only way to know what sort of deal you're getting is to compare prices at a variety of stores over time.

Herb Weisbaum is The ConsumerMan. Follow him on Facebook and Twitter or visit The ConsumerMan website.