Overstock.com Fined $6.8M for False Advertising

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Is that handbag advertised at a deep discount on Overstock.com really the bargain it appears to be?

The San Jose Mercury News says a Superior Court judge in California has fined Overstock $6.8 million after ruling that the online retailer overstates customer savings, thus violating the state’s false advertising and unlawful business practices laws.

Eight California counties participated in the lawsuit against the Salt Lake City-based discounter, alleging that Overstock inflated the original price on products, misleading customers into believing they were receiving bigger discounts. Says the Mercury News:

The court ruled that Overstock.com displayed reference prices that weren’t based on actual, but similar products and commonly listed original prices based on the highest possible price in order to overstate the amount of savings consumers could get.

Online news magazine A News Cafe says that, as part of the ruling, Overstock has “to more accurately display comparison prices and to make fuller disclosures to consumers.”

Shasta County Deputy District Attorney Anand Jesrani told A News Cafe:

We are very pleased with the result as it is a tremendous victory for all consumers. … While consumers should of course be cautious in all transactions, they have a right to expect truthful advertising from businesses. The court’s judgment of $6.8 million in penalties and the injunction sends a clear signal that false advertising is unlawful and will not be tolerated.

Overstock said previously that it would appeal the decision if it became final, California’s Marin News reports. Overstock chairman and CEO Patrick Byrne said:

We are the gold standard in retail price comparisons, and we have been for many years. … We verify each comparison price we use, and thoroughly disclose the manner in which we do so. Judge Carvill’s decision is a fine example of the principle, “No good deed goes unpunished.”

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