When I read that Menards (Wisconsin’s version of Home Depot) was fined $4.25 million for deceptive practices for its rebate program, my first thought was, “What took so long?”
As a quick recap, Menards was penalized for:
- Misleading customers about how the 11% rebate applied to their online orders;
- Listing inconsistent prices on its website;
- Claiming that everything in the store qualified for the rebate when, in actuality, several items did not qualify; and
- Advertising that its 11% rebates were a point-of-purchase discount.
As a customer, I especially didn’t like that after I mailed in my rebate, I received a store credit instead of cash. Fortunately for consumers, the settlement states that Menards may not advertise that customers will receive a discount when it’s actually future store credit.
Over the years, deceptive pricing has drawn the ire of lawmakers and the Federal Trade Commission, and it has led to lawsuits (e.g., against JCPenney). For retail stores, you must avoid the following, per the FTC rules:
- Listing a fictitious former price that leads to a phantom markdown
- Implying that a former price is a selling price instead of an asking price
- Reducing a price by an insignificant level (e.g., from $10 to $9.99) and calling it a “sale”
- Claiming your prices are lower than your competitors’ prices in the area, when in fact only a few in the area have a higher price
- Suggesting that the manufacturer’s or distributor’s suggested retail price is the price at which the product is generally sold in the area
- Not making clear the terms and conditions of a “free” offer
- Presenting a “limited” offer that is not limited
- Advertising a retail price as a “wholesale” price or as a “factory” price