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Advertising, Marketing & Promotions Alert >> California Court Ruling Rejecting Overstock.com’s ARP Program Presents Challenges for Online Retailers

January 27, 2014

Overstock.com offers more than one million products on its website for sale to consumers nationwide, including throughout California. It engages in comparative advertising based on price, using so-called "advertised reference prices" or "ARPs."

While there aren’t many regulatory or other legal challenges involving deceptive pricing, and competitive pressures sometimes force retailers to take actions they may not take otherwise, the court’s Overstock.com decision illustrates that failing to pay attention to the laws regarding pricing can be dangerous. Retailers should take a look at their policies and practices regarding comparative pricing and ensure they are compliant with the law.

 

Bottom Line

by Joseph J. Lewczak

A California state court has ruled that Overstock.com’s comparative advertising method is misleading and must be changed. In addition, the court ordered the online retailer to pay $6,819,000 in penalties.

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