Mind the Bargain Hunter’s State of Mind

Pay attention to how your shoppers who are searching for a bargain understand the nature of discounts you offer. I give you that advice after reading last month’s decision in Hinojos v. Kohl’s Corp. But since I’m a consumer psychologist, not an attorney, the context for my advice to you is the state of mind of consumers, not how your retail business should avoid legal exposure.
     The issue in the case before the U.S. Court of Appeals for the Ninth Circuit was whether Antonio S. Hinojos has standing to sue Kohl’s on his claim that Kohl’s fictitiously inflated the “original” price amounts of items advertised as discounted. Mr. Hinojos alleges that he purchased, as one example, Samsonite luggage advertised as discounted 50% off its “original” price of $299.99, but that the item was routinely sold by Kohl’s at what Kohl’s said is the discounted price.
     The court decided that Mr. Hinojos does have standing to sue, so Mr. Hinojos can now proceed to file suit if he chooses to. The basis of the decision was that, if his claims are true, he may have suffered economic harm. How could he suffer economic harm if paying no more for the items than if he’d bought them when not on sale? Because, said the court, in part, if Mr. Hinojos’ claims are upheld in a trial, he was being given a false impression of the items’ resale values.
     Although the decision was made in federal court, the applicable laws were California’s. Therefore the geographical scope is limited. Still, this federal court did note a range of advertising claims which could, because of a bargain hunter’s state of mind, lead to economic harm. Among these are “available for a limited time only,” “the same model of shoe worn by LeBron James,” “50% of customers who purchased product X also purchased our product,” and “more doctors recommend our product than any other brand.” If these claims are fictitious, they might be construed as causing the shopper economic damage, the court appears to me to be saying.
     Intentionally lying to consumers should be illegal. But shoppers also might misunderstand what is, in fact, a true statement. Even if that’s not illegal, it’s bad business. If a shopper in your store seems puzzled by a percentage discount or a time-limited offer, take the opportunity to clarify so you will maintain the shopper’s trust in you.

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Puff Up Your Bragging Judiciously