From Marketplace.org:

J.C. Penney will pay $50 million to settle a class action lawsuit in California that accused the department store of tricking consumers into thinking they were getting big discounts when they weren’t.

The suit alleged that Penney inflated “original” prices on sale items to make discounts appear larger than they actually were. The retailer denies any wrongdoing, but says it will change how it advertises and prices what it sells. The case is a reminder of how the perception of savings can sometimes mean more than the price of the item itself.

Questions for students:

• Why do you think the concept of sales is so powerful?
• How many of you have bought something because you thought you were getting a deal?
• What are you comfortable paying full price for vs. waiting for it to be on sale?
• How strict are the rules about what retailers can/cannot do when it comes to pricing?

For additional reading:

• J.C. Penney settles lawsuit on advertised false markdowns (USA Today)

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.