Madewell Sued Over 'Fake Sales' — the Complaint Says the Crossed-Out Price Was Never Real

Plaintiff Poonam Gupta has filed a proposed class action against Madewell Inc. in California state court, alleging that the retailer advertises discounts that are not real.

The mechanism at issue is strikethrough pricing — a higher "reference price" shown crossed out beside a lower price. The complaint says: "Madewell advertises the products with false, misleading and inflated comparison reference prices to deceive customers into believing the sale price is a genuine, discounted price."

The claim is not that Madewell discounts too little. It is that the crossed-out price was never a price the item actually sold at — that the products "have not been available on its website at the advertised reference price in the recent past for a substantial time."

Under that theory the harm is straightforward: a shopper buys because the discount looks steep, when in reality the "sale" price is simply the price. Gupta alleges customers were induced to buy things they would not otherwise have bought, or to pay more than they otherwise would.

Gupta seeks to represent a California class: consumers who bought any product from Madewell's website while in California at a purported discount from a higher reference price, within the applicable limitations period.

Note the two limits. It is California only, and it is website purchases — as pleaded, a purchase in a store in another state is outside the proposed class.

There is no settlement, no fund and nothing to claim. This is a newly filed complaint containing allegations that Madewell has not answered, and no court has certified a class or ruled on the merits.

Reference-pricing cases are a well-established category in California, which has specific rules about how a former price may be advertised. That makes the theory familiar rather than novel — but familiar theories still get dismissed, and most filed class actions never produce a payment to anyone.