According to Wired.com, online retailer Overstock.com got hit with a $6.42 million dollar fine levied by a state California court finding that “Overstock’s price comparison techniques violate the state’s unfair competition and false advertising laws. ”
When comparing its prices on products “to those listed by competitors, the judge found, the company is overstating the differences and misleading consumers. In short, the judge ruled that the company must better explain its comparisons on the site for all to see, or use rather complicated methods to take into account prices from multiple competitors.”
“The Friday ruling from California’s Alameda County Superior Court may force the company to alter its comparisons so that they consider prices from a wide range of top retailers.”
Overstock plans to appeal the court’s decision but told wired.com that the court’s decision could cause a ripple effect across the rest of the retail world.”
The company’s general counsel, Mark Griffin, believes that if the ruling is upheld, it could affect other online retailers as well as brick-and-mortar stores. “Other companies are going to have to really wonder if they’re next,” he says
“Under the ruling, Overstock must also pay penalties for practices dating back to the spring of 2006. The court imposed a penalty of $3,500 per day for practices from March 2006 through September 2008, and $2,000 per day for September 2008 through September 2013. That’s a total of about $6.42 million.”
“Once the ruling is final, Overstock has 60 days to comply with the a court ordered injunction which they company said would drop the the average discount shown by its price comparisons from about 33% to 26%.
Interesting. This is kind of where things are going with digital marketing and regulations. Starting to see a lot of FTC disclaimer notices on review sites. Transparency is becoming more and more of a real focus.
One of the reasons why I think that the parking industry really needs an overhaul very quickly. The new GTLD’s combined with what is becoming more and more a “wild west” approach to monetization, it’s going to put the business on a fast track to have similar things happen regarding judgements from federal or state agencies IMO.
I wouldn’t be surprised to see Google Shopping get some more obvious (larger) disclaimers on its results. They’ve been hit with some bad press recently regarding their shopping comparison results.
ouch!