Michael Kors' business has boomed in recent years thanks to its discounted outlet stores.
But now, furious customers are complaining that the company's outlet price tags are misleading, reports Jenni Avins at Quartz.
Avins tells the story of a California shopper who purchased a pair of white jeans at a Michael Kors outlet. The price tag showed a suggested retail price of $120, but the jeans had been marked down to $79.99.
"So what’s wrong with that? The seductively 'discounted' Side Anklez were never intended for sale in flagship stores at the full MSRP of $120," Avins writes. "They, like many products sold at luxury outlets, were made for sale exclusively at the Kors Outlet."
The idea of a deep discount is misleading because the jeans would have never sold for that at department stores, according to an official complaint against the company.
Michael Kors agreed to pay consumers $4.88 million to settle the lawsuit, though it denied doing anything wrong. It also said it will change the "MSRP," or suggested retail price, portion of the price tag to read "value."
The brand declined to comment, citing company policy on legal matters.
Many outlet "deals" aren't what they seem, Business Insider's Pamela Engel reported last year.
In a way, these brands — J.Crew, Gap, and Off 5th, Saks’ outlet — are essentially selling knock-offs of their own products.
Buzzfeed notes that J. Crew's outlet items are, according to the company, "based on (full-price) products sold in previous seasons." These cheaper goods are made specifically for the outlets and might not have been sold in the brand's regular retail stores at all.
For example, at Off 5th, only 10% of the merchandise is leftover Saks inventory. The rest is private-label goods and merchandise created specifically for the stores by "brand-appropriate" vendors.
But there are sometimes ways to tell whether the merchandise came from a full-price store or whether it's a cheaper version of the real thing — J.Crew Factory (the store's outlet brand) puts two diamonds under the "r" on its labels and the Gap outlet marks its products with three dots.
Pamela Engel contributed to this story.
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