Overstock.com Sued for False Advertising

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District attorneys in seven California counties are suing Overstock.com, alleging that the online retailer, which claims to offer brand-name merchandise at discount prices, has made untrue and misleading claims about the prices of its products.

The complaint, filed late last week in Alameda County, alleges that instead of comparing its “Today’s Prices” with prices charged by other merchants, Overstock often made up “list prices” and “compare at prices” based on arbitrary markups over its price for the product.

It cites a particular incident in which a Cottonwood, Calif., resident purchased a patio set for $449.99 that Overstock claimed was retailing for $999. According to the lawsuit, the furniture subsequently arrived with a Wal-Mart sticker showing the price to be $247.00.

“Such misrepresentations were likely to discourage consumers from making the effort to search elsewhere for lower prices,” Santa Clara County District Attorney Dolores A. Carr said in a statement.” In our opinion, this conduct constitutes untrue or misleading advertising, and legal action is necessary to protect our consumers from such practices”

Carr and the district attorneys from Napa, Alameda, Marin, Monterey, Shasta and Sonoma Counties are seeking $15 million in fines and restitution.

In response to the lawsuit, Overstock released its own statement last week denying the allegations.

“Overstock.com stands by all our advertising practices, including providing comparison values which we thoroughly explain on our site," said Jonathan Johnson, president of Overstock, in a statement. “We have been singled out for standard industry practices, which we look forward to demonstrating in court.”

According to Johnson, the company had been involved in discussions for some time with officials from the different DA offices. “Over a period of years we worked to resolve this with representatives of these offices, and thought we had made great progress,” he said, adding that the lawsuit itself was strategically timed, no doubt to coincide with Black Friday and the impending holiday weekend.

What online shopping sites should you hit up over the holiday weekend? Find out in this MainStreet article!

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