If there are always 20% off coupons readily available and you never have to pay full price, does the cost without a coupon really constitute “full price” anymore, and are you really even getting a discount at all?
That’s what a California court has been asked to decide about the craft store chain Michaels.
After Michaels shopper Nea Vizcarra sued the retailer last year over what she calls its “fake prices and fake discounts,” the judge in the case has now allowed it to proceed, denying Michaels’ motion to dismiss the lawsuit.
“While there is nothing wrong with a legitimate sale,” Vizcarra’s lawsuit reads, “a fake one — that is, one with made-up regular prices, made-up discounts, and made-up expirations — is deceptive and illegal.” She argues that Michaels deceptively advertises that you can save at least 20% off its regular prices by using a coupon, but since there is always a coupon available, the 20% price is essentially the de facto “regular price” and you’re not really saving anything.
Back in November 2022, Vizcarra said she made several purchases from Michaels’ website, using a 20% off coupon code. Two months later, she made an in-store purchase using a 20% off coupon at the register. But she began to wonder what, if anything, she was really saving.
Her lawsuit describes how her attorney scoured archived versions of Michaels’ website, and found that “in every single one… a site-wide discount of at least 20% was advertised,” often claiming to be for a “limited time.” A similar search of the website’s page where in-store coupons can be found, determined that a 20% coupon was always available – as soon as one expired, a new one with a new expiration date would take its place.
“The ‘regular’ prices Defendant advertises are not actually Defendant’s ‘regular’ prices, because Defendant’s products are always available for at least 20% less than that,” the lawsuit alleges. This leads “reasonable consumers to believe that they will get a discount on the products they are purchasing if they purchase during the ‘limited time’ promotion,” it continues. “This creates a sense of urgency: buy now, and you will receive something worth more than you pay for it; wait, and you will pay more for the same thing later.”
In arguing for the case to be dismissed, Michaels stated that “while discounts may be available, that does not mean that all consumers are aware of them or undertake the required affirmative steps to take advantage of them.” So some shoppers do indeed pay full price, which is enough to establish that those prices are “regular prices” and the advertised 20% coupon savings are legitimate discounts.
“That may be the case,” the judge stated in allowing the case to proceed. “But even advertisements which are technically true can still be misleading, deceptive, or confusing.”
In her lawsuit, Vizcarra noted that Michaels had previously settled a similar case. Back in 2011, the retailer agreed to a $1.8 million settlement with New York’s Attorney General, over its 50% off framing coupons. “Michaels advertised its ‘Custom Framing’ as a sale product for at least 104 consecutive weeks,” the Attorney General’s office said in announcing the settlement. “The law prohibits sales that are never ending.”
The case is also somewhat similar to a lawsuit that led Michaels competitor Hobby Lobby to quit offering coupons altogether. In that case, Hobby Lobby shoppers argued that the retailer’s 40% off coupons were misleading, because they only applied to the fictional “regular prices” of the “always discounted” items that Hobby Lobby actually charged. When the two sides agreed to settle the case in 2021, Hobby Lobby decided not to offer coupons at all anymore.
Bargain-hunting crafters might not like it if the same thing ultimately happens at Michaels. But they might like being part of a nationwide class action, which is what Vizcarra is hoping her case will become. Her lawsuit alleges false advertising, breach of contract, misrepresentation and other claims, and she’s seeking damages and restitution on behalf of all affected Michaels shoppers, as well as a court injunction ordering Michaels to refrain from any future misleading pricing advertisements.
So use those 20% off Michaels coupons while you can. Just be warned, as this case proceeds toward a possible trial – you may not be getting quite the savings you think you are.
Image source: Michaels
