Retail’s Biggest Ripoff Parades as a Buying Opportunity

Don't be taken in by fake sales and phony reductions. Here's what you need to know to avoid being manipulated.

Is your favorite store trumpeting a 50 percent off sale or other price-slashing offers that seem too good to resist? Think twice before you plunk down your hard-earned cash.

Most of us love bargains and feel the thrill of victory when we snare them. But what you might not realize is that the 50 percent off sales are likely not where you’ll find the “bargains.” In fact, when an item is advertised as half off, you may really be paying more than if you bought it at the “regular” price. And, some of those screaming deals you think you’re getting through online discount and coupon sites are the digital equivalent of the brick-and-mortar price deception.

So, understand this and avoid being manipulated:

The fiction of the ‘list price’

JCPenney, Kohl’s, Macy’s and Bloomingdale’s all have been sued for misleading bargain-hunting customers with the use of high-percentage-off deals. In some cases, the price listed as the “original” was two times the manufacturer’s suggested retail price, reported Money. That meant the 50-plus percent “discount” left a buyer with more than the original manufacturer suggested retail price.

Here’s an idea of how it works, in an example noted by Time: A Lenox ornament was seemingly discounted at Macy’s from $60 to $17.99. The problem? There was no evidence that Macy’s ever sold that ornament for the $60 price.

Here’s another example from Stacy Johnson, founder of Money Talks News: A Samsung TV on Amazon is selling for about $600 — 20 percent, or about $150 off the “list price” of $750. Looks like a good deal, right?

But with just a little research you can find the same TV on Google Shopping, with lots of places selling this TV, shipping included, for about $550. That’s $50 less than Amazon.

Then, check this out: One of the sites that pops up on Google Shopping selling this TV for $550, B&H Photo, claims the TV really costs $947.99, and lucky you are instantly saving $400.

As you can see, retailers take a lot of liberties with “list” prices.

“If you’re selling $15 pens for $7.50, but just about everybody else is also selling the pens for $7.50, then saying the list price is $15 is a lie,” David C. Vladeck, the former director of the FTC’s Bureau of Consumer Protection told The New York Times.

Be aware of the digital version

And sadly, yes, many online “bargains” including those by Groupon and Living Social are also not true deals, reported The Wire, a division of Atlantic Media.

Their reporting (based on limited data) suggested that many original prices provided by these sites were inflated and, thus, so were the savings offered.

Here’s what Consumer Reports had to say on the topic:

We’ve seen similar issues with merchant references to manufacturer list prices. For example, while researching a recent story about buying prescription eyeglasses, we found several instances in which eyeglass websites gave different list prices for the exact same frames. We found other cases in 2011, including one website showing an $86 list price for Hewlett-Packett Deskjet 3000 printer with an actual MSRP of $69.99. The site’s $66.99 price, purported to be a $19 savings, was in fact a reduction of only $3 off the list price.

Don’t be blinded by the sea of “sales” signs you’ll see in some stores. And forget references to list price, MSRP, street price, retail price, or a retailer’s “regular” or “original” price. Instead, comparison shop to find the best price before buying. Use an Internet search with the exact product name and model number so you’re sure you’re comparing the same item.

So, what the lesson here? Always assume the list price and savings on such “deals” are simply made up. Research is the key to make sure that you’re really getting the bargain you want. The Internet makes it easy to do!

Not sure where to start? Try our partner site, where bargain researchers keep their eyes on “millions of products” and surface the best deals. Ben’s Bargains is another one they suggest for its price history data and “Cheaper Than Amazon” feature.

And then, even when you think you have a great deal in hand, do a little more research on your own. Remember, every retailer — whether you are shopping in a store or online — is trying to get the most money out of you. Only with some effort will you see whether the price they ask is fair or not.

Do you find yourself sucked in by advertisements that trumpet massive price cuts? What’s your way of figuring out whether products are actually a good deal? Share your thoughts in comments below or on our Facebook page.

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