Saks Off 5th Pays $1.5M Over Fake Discount Claims in Class Action Settlement
Company
Saks Off Fifth
Why
Misleading advertising
Total Settlement Amount
$1.5M
Maximum Individual Claimant Award
$20 merchandise certificate
Claim, Opt Out & Objection Deadline
March 16, 2025
Saks Off 5th faces a major legal challenge over its pricing practices, agreeing to pay $1.5 million to settle claims about misleading discount advertisements. The Saks Off 5th settlement addresses allegations that the retailer inflated original prices before marking them down, making deals appear more attractive than they actually were during Saks Off 5th sale events.
This class action settlement affects all customers who shopped at Saks Off 5th outlets or Saks Off 5th locations between January 2011 and November 2024. Importantly, eligible class members can receive up to $20 off in merchandise certificates that never expire and are fully transferable. This legal action, filed under California's consumer protection laws, aims to ensure more transparent pricing practices at Saks Off 5th and Saks Fifth Avenue online platforms moving forward.
Saks Off 5th Agrees to Pay $1.5M in Settlement
The class action lawsuit against Saks Off 5th alleged that the retailer engaged in deceptive advertising practices by manipulating product prices. Subsequently, the company agreed to resolve these claims with a $1.5 million settlement.
The legal complaint centered on the retailer's pricing strategy at Saks Off 5th outlets. Specifically, the company labeled clothing with tags showing significantly reduced prices compared to a "Market Price". Furthermore, this marketing approach suggested these items were previously sold at traditional Saks Fifth Avenue retail stores.
Nevertheless, the lawsuit revealed that many items were exclusively manufactured for Saks Off 5th stores and were never intended for sale at regular Saks Fifth Avenue locations. Therefore, the displayed "Market Price" was artificially inflated, making the discounts appear more substantial than they actually were, constituting a false discounting scheme.
This practice caught the attention of several members of Congress, who noted that outlet stores commonly advertise retail prices alongside outlet prices, even for merchandise specifically made for outlets. Additionally, since these items never appeared in regular retail stores, the original prices were impossible to verify.
The Federal Trade Commission's Guides Against Deceptive Pricing (16 CFR 233) addresses such practices. Moreover, the lawsuit claimed that customers relied on these misrepresentations when making purchasing decisions. Particularly, shoppers believed they were buying authentic Saks Fifth Avenue-branded products at significant discounts.
While Saks Off 5th has not admitted to any wrongdoing, the settlement demonstrates the company's willingness to address these pricing concerns. The agreement covers purchases made between January 1, 2011, and November 1, 2024. Notably, the settlement received preliminary approval from the Superior Court of California, County of San Diego.
The resolution requires Saks Off 5th to modify its pricing practices moving forward. Consequently, this settlement aims to ensure more transparent pricing for consumers shopping at Saks Off 5th stores and through their online platform.
Court Mandates New Pricing Guidelines
Under the settlement agreement, Saks Off 5th must implement strict pricing guidelines to ensure transparency in their discount advertising practices. Initially, the retailer must clearly distinguish between items manufactured specifically for outlet stores and those originally sold in regular Saks Fifth Avenue locations.
The settlement introduces a new merchandise certificate program worth up to $20 per eligible customer. These certificates come with unique features that benefit consumers:
No expiration date
Full transferability to other shoppers
Usability on sale items
Flexibility across all product categories except gift cards and services
For customers seeking price adjustments, Saks Off 5th has established clear terms:
Adjustment requests must be submitted within 7 days of purchase
Items must remain in stock in the same color
Price matching requires identical size and color availability
Gift card promotion items are excluded from adjustments
Requests can only be processed after order shipment
The final approval hearing, also known as the fairness hearing, is scheduled for April 18, 2025. This hearing will determine the implementation timeline for these new guidelines. Throughout this process they have agreed to these changes to resolve the dispute and avoid prolonged litigation.
The settlement affects all purchases made through both physical Saks Off 5th outlets and their online platform at www.saksoff5th.com. Henceforth, the retailer must maintain accurate records of original prices and ensure that advertised discounts reflect genuine price reductions rather than inflated comparisons.
Class members have until March 16, 2025, to either accept these terms or file objections. After this date, participating customers waive their right to pursue individual lawsuits regarding these specific pricing practices. This comprehensive agreement aims to establish a more transparent shopping experience while providing immediate benefits to affected customers rather than waiting for potential court outcomes years later.