Consumers in class action accuse Shein of promoting fake discounts

(CN) — A group of consumers is accusing fast fashion company Shein of illegally misrepresenting the sale savings of its discounted products by artificially inflating original prices to deceive customers into thinking they are saving more than they really are.

“Shein systematically represents to its customers that they are receiving substantial discounts at marked down prices when they purchase Shein-branded products,” the consumers say in the complaint. “However, on information and belief, Shein does not offer these products at a genuine discount.”

Three customers — Stacee Severino, Gayle Brownlee and Pooja Prakash — say Shein likely never offered products at the full reference price and instead artificially inflated the listing price to induce customers to buy the products for a lower price.

“This deceptive practice has allowed Shein to reap billions of dollars in revenues from the U.S. alone, all at the expense of unsuspecting customers who believe Shein’s sales prices are genuine, discounted bargain prices,” the customers say in the complaint filed Monday in federal court in California.

Shein is one of the largest fast fashion companies in the world, primarily selling women’s clothes and accessories. It has a variety of in-house brands and product lines and offers those products direct to consumers.

The plaintiffs are seeking to represent a nationwide and California class of customers who purchased one or more items from Shein within the last four years.

“Consumers are misled because the advertised reference price is not the market price,” the customers write. “Indeed, because the products are regularly available on the website at discounted prices, the prevailing market price cannot be the higher price.”

The customers accuse Shein of fraud, unjust enrichment and negligent misrepresentation.

“By using false reference pricing, Shein artificially drives up demand for the products, and by extension drives up their price,” the customers wrote. “As a result, consumers receive products worth less than the price paid.”

The customers claim Shein will represent to customers that a product has a regular price of $100 and advertise it on “sale” at 60% to sell the product for $40, despite knowing the same product would sell in the marketplace for $30.

“As a result, consumers are deceived into spending money they otherwise would not have spent, purchasing items they would not have purchased, and/or spending more on an item than they otherwise would have absent deceptive marketing,” the customers say.

Specifically, the customers point to price listings tracked on AliPrice and Microsoft Shopping that show certain products were either never offered for the reference price advertised by Shein or only briefly offered at the higher price to establish a misleading basis for comparison.

For example, the plaintiffs included price tracking for a two-piece white shirt and pants set Shein offered through its EZwear line. Shein advertised the set as on sale for $18.31, down 41% from its original price of $31.19. However, the plaintiffs claim the set was consistently listed near or below the sales price during the preceding six months according to price tracking from AliPrice and Microsoft Shopping.

The customers accuse the company of violating California’s Unfair Competition Law, which bars companies from “unfair, deceptive, untrue or misleading advertising.”

“Shein’s representations that the products were on sale, that the products had a specific former and regular prices, and that consumers were receiving genuine discounts from the reference prices, were false and misleading,” the customers wrote.

The customers say they would not have bought the items from Shein, or at least not paid as much for them, had the company not misrepresented the reference prices.

The plaintiffs also accuse the company of violating the California False Advertising Law and the California Consumer Legal Remedies Act.

The customers also named Roadget Business and Zoetop Business as defendants. Roadget is the developer of the Shein app and the successor-in-interest to Zoetop, which was Shein’s parent company until late 2021. Milberg PLLC and Cafferty Clobes Meriwether & Springel LLP are representing the plaintiffs.

Neither Shein nor the plaintiffs immediately responded to requests for comment.