One of the world’s most recognizable clothing brands is in the limelight, not for a new fashion line but because of a lawsuit alleging it has engaged in deceptive pricing tactics.
Zara has denied claims made in a class action lawsuit filed last week that alleges the Spain-based clothing giant has been deceiving customers by listing prices in euros, then cheating them at the register with artificial exchange rates.
The suit, brought by Los Angeles resident Devin Rose, makes two distinct allegations against the company.
First, the suit alleges that Zara is confusing customers by tagging their clothing with prices quoted in euros.
"Since the euro is a larger unit of currency than the American dollar, these euro prices lead shoppers in the United States to believe that Zara’s products are less expensive than they actually are," the suit, which was filed by celebrity lawyer Mark Geragos, claims. "Customers are lured in by the brand’s seemingly low prices, and it is only upon bringing the items they intend to purchase to the register that these customers discover their true costs."
It goes on to claim that the final sale price (which in the U.S. is, of course, in dollars), is "well in excess of the true converted amount if the euro price on the tag were properly converted to dollars."
Second and similarly, the suit alleges that when a U.S. dollar price is given on labels affixed to the clothing, the dollar price is given in a label stuck over the euro price that was already on the tag.
"In this context, the dollar amount similarly is far in excess of the true converted amount if the euro price printed on the tag were properly converted to dollars," the court documents state.
"Rather than converting an original euro price to an equivalent American dollar price," the documents add," Zara simply chooses a higher dollar amount that bears no relation to the relevant conversion rate."
Rose said he purchased three shirts, which he claimed were “€9.95” each, from one of the company’s stores in May.
"At the time that Mr. Rose made his purchases, the actual euro-dollar exchange rate would have resulted in his €9.95 shirts costing approximately $11.26," the suit claims. "However, Zara charged Mr. Rose $17.90 per garment, a markup of nearly 60%."
Zara has denied the allegations calling them "baseless."
"Zara USA vehemently denies any allegations that the company engages in deceptive pricing practices in the United States," a company spokesperson told ABC News in a statement. "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."
The suit seeks damages, to be determined at trial.
- Company Legal & Law Matters