Zara USA has denied allegations made in a lawsuit filed by a disgruntled shopper in California that the company has engaged in deceptive price practices.
A spokeswoman for Zara USA on Tuesday said, “Zara USA vehemently denies any allegations that the company engages in deceptive pricing practices in the United States. While we have not yet been served the complaint containing these baseless claims, we pride ourselves in our fundamental commitment to transparency and honest, ethical conduct with our valued customers.”
The spokeswoman added, “We remain focused on providing excellent customer service and high-quality fashion products at great value for our customers. We look forward to presenting our full defense in due course through the legal process.”
Zara USA Inc. was sued on Friday over pricing practices in the U.S. that the plaintiff claims are deceptive and “fraudulent.”
The lawsuit was filed in a Los Angeles federal district court by Devin Rose. It seeks class-action status. Rose seeks damages for negligence, unfair business practices, unjust enrichment and fraud. The suit also said federal court was the appropriate jurisdiction because some members of a prospective class are from different states and because the matter in controversy exceeds $5 million.
Zara is the popular and trendy fast-fashion retailer that is the flagship brand of Inditex, which is based in Spain. It counts many celebrities as customers, as well as Kate Middleton, the Duchess of Cambridge.
The lawsuit charges that Zara’s currency “conversion rate (from euros to dollars) is entirely misapplied — to the extent it is even applied at all — such that U.S. consumers are paying far more than the true prices of the products.” The complaint also claims that Zara “violates state and federal law by luring consumers to the register with perceived lower prices using a foreign currency and surreptitiously imposing an arbitrary markup without making an appropriate, or any, disclosure to the consumer.”
Rose, the purported class plaintiff representative, said in the lawsuit that he purchased three shirts from a Zara retail store in California, each bearing a tag that was priced at 9.95 euros. At the register, he was charged $17.90 for each shirt. He said he questioned the price and was given inconsistent information about pricing and the conversion rate. He also said in the lawsuit that the actual euro-dollar exchange rate at the time he purchased the shirts would have been $11.26 for each shirt, instead of the $17.90 he paid, which resulted in a “markup of nearly 60 percent.”
The lawsuit further alleges that “On average, consumers are being charged $5 to $50 more than the lowest tag price in euros.” The complaint contends that in the aggregate, Zara has been “unjustly enriched to the tune of billions of dollars.”
The complaint further claims that under California law, it is a criminal offense to “charge an amount greater than the lowest price posted on [a product] itself or on a shelf tag that corresponds to the [product].” Rose seeks unspecified compensatory and punitive damages.