Is That "Sale" Price Real?
How to Spot a Fake Discount — and What California Law Says About It
You’ve seen it a thousand times. You’re browsing online or walking through a store and you spot it: a product with a price dramatically crossed out, replaced by a lower number and a bold “50% OFF” badge. Your brain registers: bargain. Your hand reaches for your wallet.
But what if that crossed-out price was never real to begin with?
That’s exactly what a new class action lawsuit filed in the Northern District of California alleges against Nordstrom Rack — and it’s a problem that touches millions of California shoppers every single day.
The Lawsuit: Cheng v. Nordstrom, Inc.
Our firm recently filed Cheng v. Nordstrom, Inc. on behalf of plaintiff Joanna Cheng, a San Mateo County resident who purchased a children’s nightgown from NordstromRack.com. The product was displayed with a selling price of $20.87 alongside a struck-through “Comparable Value” reference price of $42.00 — promising a 50% savings.
The problem? According to the complaint, that $42.00 reference price was never a real price for that product. Nordstrom Rack allegedly uses a practice of selecting a price from what it deems a “comparable” product sold by an entirely different brand and then presenting that number as the benchmark for savings calculations. The actual product — an AME-brand Disney character nightgown sold through mass-market retailers — was never offered for sale at anything close to $42.00 in the California market.
The lawsuit brings claims under California’s False Advertising Law (FAL), Unfair Competition Law (UCL), and Consumers Legal Remedies Act (CLRA), and seeks relief on behalf of all California consumers who purchased Nordstrom Rack products advertised with “Comparable Value” reference prices during the past four years.
The Law: California’s 90-Day Price Rule
Most consumers don’t know this, but California has one of the strongest reference pricing laws in the country. Cal. Bus. & Prof. Code § 17501 sets strict rules for when a retailer can advertise a “former price” or a “Comparable Value” comparison:
For a “former price” advertisement, the crossed-out price must have been the actual prevailing price at which the same item was sold in the ordinary course of business within the three months immediately preceding the advertisement. Not the price of a similar item. Not a manufacturer’s suggested retail price. The actual selling price of that exact product, sold in the regular course of business, within the last 90 days.
For a “Comparable Value” comparison, California law requires that the merchandise used for the comparison be of like grade and quality and have been actually offered for sale or sold at that reference price in the trade area. The comparison can’t be to an entirely different brand or SKU that Nordstrom Rack unilaterally decided was “comparable.”
In plain terms: if a store shows you a crossed-out price, that price has to be real. It has to be the price at which that same product actually sold recently — not a number pulled from a different product, a different brand, or thin air.
How to Spot a Fake Discount
Here are the red flags consumers should watch for when shopping — in stores or online:
1. The “Comparable Value” or “Compare At” label This is the biggest tell. When you see “Comparable Value: $X” or “Compare At: $X” next to a product, the retailer is not claiming that the product itself ever sold at that price. It’s comparing to some other product it deems similar. Under California law, that comparison still has to be grounded in real sales of merchandise of like grade and quality in your trade area — but retailers often ignore that requirement entirely.
2. The discount seems impossibly large When a product is perpetually 40%, 50%, or 60% off, ask yourself: has it ever actually sold at the “original” price? Off-price retailers like Nordstrom Rack, TJX, and Burlington receive merchandise specifically for their stores — meaning there may be no original retail price to compare against at all.
3. The fine print is microscopic or missing California law requires that price comparisons be truthful and non-misleading. When a retailer buries the basis for its comparison behind a tiny circled “i” icon or doesn’t disclose it at all, that’s a warning sign. A legitimate comparison should be transparent about what the reference price represents.
4. The “sale” never ends If a product has been “on sale” every time you’ve visited a website or store, the sale price is the real price. A promotional price that’s permanent isn’t a discount — it’s deceptive advertising.
5. The product is store-exclusive or off-brand If you can’t find the product at any other retailer, there’s no way to verify whether the reference price was ever a real market price. Be especially skeptical of reference prices on goods manufactured specifically for off-price retailers.
What You Can Do
If you’re a California consumer and you’ve purchased products from Nordstrom Rack’s website or stores based on “Comparable Value” reference prices, you may have rights under California law.
More broadly, if you’ve purchased any product — from any retailer — where the “original” or “compare at” price seemed inflated or unverifiable, here’s what to do:
Screenshot everything. Capture the product listing, the reference price, and the date before it changes.
Search for the product. See if it’s sold elsewhere. If it is, compare prices. If it isn’t, ask yourself how the retailer calculated its reference price.
Check the fine print. Look for any disclosure about what the reference price represents. Vague language like “similar items” or “comparable merchandise” is a red flag.
Keep your receipts. If you paid a price premium based on a false “discount,” you may be entitled to restitution.
Why This Matters
Reference price fraud isn’t a victimless corporate shortcut. When a retailer inflates a crossed-out price, it manipulates your perception of value and induces you to spend money you might not otherwise spend. California’s legislature understood this when it passed § 17501, and the courts have consistently recognized that misleading price comparisons cause real economic harm to real people.
Cheng v. Nordstrom, Inc. is one piece of a broader effort to hold retailers accountable when they use fake discounts to deceive California consumers. If you think you’ve been the victim of deceptive reference pricing, we’d encourage you to speak with a consumer protection attorney.
Javitch Law Office represents plaintiffs in consumer protection and civil rights matters. If you have questions about a potential claim, you can reach us at mark@javitchlawoffice.com or (650) 781-8000.
This blog post is for informational purposes only and does not constitute legal advice