LOS ANGELES (CN) - A class action accuses Neiman Marcus of deceiving consumers by labeling clothes for sale at its Last Call discount stores with tags comparing the prices to traditional Neiman Marcus stores - though the clothes were never offered for sale there.
Lead plaintiff Linda Rubenstein accuses The Neiman Marcus Group of false advertising, unfair competition and violating state consumer law, in her Aug. 7 complaint in Superior Court.
Neiman Marcus's 41 U.S. retail outlets reported more than $400 million in revenue in 2013, Rubenstein says in the lawsuit. The company also runs 35 Last Call stores, which sell clothes more cheaply.
Clothing sales at such factory outlet stores rose by 17.8 percent in 2011, far faster than industry-wide clothing sales growth of 1.4 percent that year, according to the complaint.
Rubinstein claims that Neiman Marcus "immersed themselves into this lucrative industry" by claiming to sell "the alleged exact same clothing after season and/or excess clothing that defendant's traditional stores once carried, but for a discounted price."
She claims that Neiman Marcus "labels its Last Call clothing with a tag that shows a markedly lower price from the 'Compared to' price which corresponds to the price that appears to be used in traditional Neiman Marcus retail stores."
But it's not true, Rubinstein says. "Defendant's Last Call clothing is actually not intended for sale at the traditional Neiman Marcus stores as the 'Compared to' pricing strategy suggests, but rather strictly for the Last Call store. Therefore, defendant's price tags on the Last Call clothing are labeled with arbitrary, inflated 'Compared to' prices that are purely imaginative because it was never sold at the traditional Neiman Marcus store and therefore can't be compared to any price. Thus the insinuated price is false and misleading."
Rubinstein claims that the Federal Trade Commission has received complaints from "many members of Congress" about this deceptive strategy.
She seeks class certification, disgorgement and restitution, an accounting, statutory and exemplary damages, and costs.
She is represented by Heather Baker with Kirtland & Packer.