Boohoo seeks court dismissal of US pricing case

By

Barbara Santamaria

Published
Sep 28, 2020

Boohoo is urging a Californian court to dismiss a $100m (£79m) lawsuit brought forward by customers who accuse the retailer of offering “fake” discounts.

The British fashion group behind Boohoo, Nasty Gal and PrettyLittleThing is facing a class action lawsuit, claiming it used inflated prices to dupe customers into thinking they were getting a bargain. 

According to The Daily Telegraph, one of the three court claims was filed in April but was not disclosed to shareholders ahead of a £197m fundraising in May.

In a court filing urging the case to be dismissed, Boohoo’s lawyers made a series of technical legal arguments, saying that the claimants had not been “left out of pocket” and that customers based outside California should be excluded from the lawsuit. They also said that some claimants did not have a standing to bring claims relating to items they never purchased. 

The Manchester-based retailer, which made a £92m profit on £1.2bn sales in the year to February 2020, has faced similar pricing allegations in the UK. In 2018, the company was reprimanded by Britain’s Advertising Standards Authority for running misleading promotions and earlier this year, a series of ads were banned for misleading customers into thinking some discounts were time-limited.

Boohoo has also recently become embroiled in a different kind of scandal involving poor working conditions at its Leicester factories. On Friday, an independent review revealed that senior company directors knew there were “serious issues” in its supply chain months before the scandal broke. 

The company admitted its Leicester supply chain has “many failings” and has committed to implementing a series of measures to improve its purchasing practices.