Michael Kors Holdings Ltd. has agreed to pay $4.9 million to settle a lawsuit alleging deceptive practice and misleading labeling at its outlet stores.
The class-action lawsuit was filed by Tressa Gattinella and Kristin Lengyel in a Manhattan federal court in July 2014, alleging that the company sold products at its outlet stores that featured made-up suggested retail prices. The suggested prices, referred to on tags as the manufacturer’s suggested retail price, were said to be fake because the tagged items were made for the Michael Kors outlet stores.
In a court document filed on Friday detailing the proposed settlement — it still requires court approval to be valid — the tags were said to deceive customers into “believing they are purchasing products that were formerly sold or offered at a higher price at main-line retail stores and are now significantly cheaper at the outlet stores.” That’s because the tags featured both the MSRP as well as “Our Price,” the lower outlet price paid by the consumer.
The company has not admitted to any wrongdoing in its settlement.
In the settlement, the apparel and accessories firm agreed to modify price tags at its U.S. outlet stores. Kors agreed to stop using the MSRP reference and to replace it with the word “Value” on the price tags of goods sold at its outlet stores. Further, it agreed to explain the meaning of the term “Value” to its customers in display signage in the stores.
The settlement covers the period from July 25, 2010 through July 25, 2014.
A spokeswoman at Kors did not return a request for comment.