Spanish retail giant Zara is under fire this week and is facing a massive lawsuit after claims it has been scamming customers into paying more money, with claims the brand has been ‘unjustly enriched to the tune of billions of dollars.’
“Zara violates State and Federal law by luring consumers to the register with perceived lower prices using a foreign currency and surreptitiously imposing an arbitrary markup without making an appropriate, or any, disclosure to the consumer.”
A huge $5million lawsuit has been launched against the clothing chain for practising ‘fraudulent’ pricing across the US. The lawsuit claims that Zara have been luring customers to the tills through it’s bait-and-switch pricing, which involves labelling the clothes with the price in Euros, rather than dollars, and the price inflating when being converted back to dollars due to currently high conversion rates.
“Zara’s practice of assuring consumers that the discrepancy between the tag price in euros (€), and the dollar ($) price at the register is merely the result of an appropriate application of the conversion rate from euros to dollars.
‘In fact, the conversion rate is entirely misapplied – to the extent it is even applied at all – such that U.S. consumers are paying far more than the true prices of the products.’
This lawsuit was launched after a consumer, Devin Rose, claimed that his shopping experience in-store (along with other consumers) “has been damaged in that Zara’s deceptive pricing practices caused him to overpay for the garments he purchased.” Zara charged Mr. Rose $17.90 per garment, garments which were marked 9.95euro on the tag, a markup of nearly 60%.
Zara is claimed to been unjustly earning billions of dollars this way.
This is where it gets interesting, Zara totally dismisses the allegations, totally!
A rep for Zara USA released a statement in response to The Fashion Law, saying that it “denies any allegations that the company engages in deceptive pricing practices in the United States.”
“While we have not yet been served the complaint containing these baseless claims, we pride ourselves in our fundamental commitment to transparency and honest, ethical conduct with our valued customers. We remain focused on providing excellent customer service and high-quality fashion products at great value for our customers. We look forward to presenting our full defense in due course through the legal process.”
In response to Zara’s statement, Rose’s legal team replied with the following,
“Zara’s response so far has been beyond bizarre and desperate. Their unlawful conduct is not up for debate, as anyone who goes into a Zara store in the United States can see with their own two eyes that Zara is pricing clothing in euros and charging consumers drastically above the lowest tag price in dollars which is illegal. U.S. laws require that a retailer charge the consumer the lowest tag price — not grossly inflated amounts using fake conversion rates. If Zara wants to double down on its duplicity, instead of acting like a responsible corporate citizen and fixing the mess of its own making, they should be prepared to face the wrath of the American consumer and the full force of the law.”
How this case will unfold is unknown, we’ll keep you updated for sure. Rose definitely isn’t going down without a fight and we don’t blame him, we all know how frustrating experiences like this can be! For now though, keep hold of your receipts!