Over the last 18 months, patrons of the nation’s most popular outlet stores have hit well-known retailers, including Gap Outlet, Banana Republic Factory Store and Saks Off 5th, with a flood of class action lawsuits for false and misleading advertising. In early 2014, four members of Congress wrote to the Federal Trade Commission (“FTC”) asking the agency to begin an investigation into the sales practices at outlet stores.
Meanwhile, class action suits against outlet and discount stores over alleged unlawful pricing practices continued to pour in during 2015, including ongoing cases against Burlington Coat Factory, the TJX Companies, Inc. and Columbia Sportswear Co. Likewise, courts have been issuing some stinging results, including, in Alameda County, a $6.8 million judgment in a case brought by California district attorneys against online retailer Overstock.com; a New York federal judge’s approval of a $4.87 million settlement to resolve a similar class action suit against Michael Kors Outlet Stores; and, earlier this month, J.C. Penney Corp. Inc. agreed to a $50 million settlement for plaintiffs in a class action lawsuit that accused the retail chain of false advertising practices.
In the Q&A, Phyllis Marcus, former FTC chief of staff of the Bureau of Consumer Protection’s Division of Advertising Practices and counsel in Hunton & Williams’ competition practice, and Wally Martinez, the firm’s managing partner, discuss the latest trends in consumer protection and consumer false advertising and reflect on the legal challenges in the thriving $25 billion outlet and retail discount market.
Read the full Q&A.