Costco Accused|of Bait and Switch

MANHATTAN – Costco advertises Michael Kors handbags “starting at $99” but it’s not authorized to sell them – it’s a bait and switch, Kors claims in Federal Court.
     Kors explicitly accuses Costco of running a bait and switch in the complaint.
     “Costco is not an authorized retailer of Michael Kors handbags, yet nonetheless it has disseminated nationwide advertising that prominently features Michael Kors’ high sought-after luxury handbags and claims those handbags are available from Costco ‘starting at $99,'” the complaint states. “But when a consumer ‘takes the bait’ and seeks to purchase Michael Kors handbags at a Costco store or on Costco’s retail website, no such handbags are available.
     “This bait-and-switch scheme, which intentionally exploits the popularity and appeal of Michael Kors’ luxury handbags to lure unsuspecting consumers away from bona fide Michael Kors retailers and into Costco stores, unjustly benefits Costco to the detriment of Michael Kors and authorized retailers.”
     Kors claims Costco launched the deception for Mother’s Day.
     “On April 16, 2012, Costco sent an electronic mail blast advertisement (the ‘bait-and-switch ad’) to consumers featuring ‘Mother’s Day gift ideas,'” the complaint states. “At the top of the bait-and-switch ad, Costco featured a large picture of three handbags, one of which (on the left, right next to the ad language) is unmistakably a Michael Kors handbag that prominently features the Michael Kors trademarks. Beneath the photos of these three handbags are smaller pictures of seven more handbags, three of which are also Michael Kors handbags that prominently feature the Michael Kors trademarks.”
     But Costco can’t, and does not, sell Michael Kors handbags, Kors says.
     It seeks an injunction and punitive damages for false advertising and unfair competition.
     Kors is represented by Darren Johnson with Paul, Weiss, Rifkind, Wharton & Garrison.

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