Online rug retailer Rugs.com has been hit by a consumer class action in federal court, accusing the retailer of fraud and false advertising, allegedly for pulling the wool over consumer eyes by selling heavily discounted rugs that allegedly were never sold at the alleged original price advertised.
Named plaintiff Roula Aldimassi, on behalf of herself and others, filed suit on May 17 in the U.S. District Court for the Northern District of California accusing Rugs.com on multiple counts of alleged false advertising for alleged violations of California’s False Advertising Law, Consumer Legal Remedies Act, and the Federal Trade Commission, alleging they routinely engage in price deception.
Headquartered in Fort Mill, South Carolina, Rugs.com has been doing business online since 2018. The flooring outlet center primary market is rugs and carpets. The company claims to have a warehouse inventory of tens of thousands of items in stock, offering a selection from low-end polypropylene rugs, up to Persian hand-knitted rugs, valued at tens of thousands of dollars at retail.
According to the complaint, Rugs routinely promotes items on sale, striking out the purported "original" price as many retailers do, with the promotion offering the items now at a very steep reduction. Aldimassi is claiming the retailer's price reduction claims are false, alleging the items promoted were never at that original price. He states the retailer's fraudulent practice of price reduction deception tactics in these so-called "sales" routinely dupes consumers to buy into the deception.
According to legaldictionary.net, a common form of false advertising known as price deception or price reduction deception occurs when an item is promoted at a reduced cost when in fact, the item was never sold at a higher price point.
California’s False Advertising Law prohibits businesses from making statements they know or should know to be untrue or misleading. This includes statements falsely suggesting that a product is on sale, when it actually is not; more specifically, it provides that “[n]o price shall be advertised as a former price … unless the alleged former price was the prevailing market price...". Similarly, California's Consumer Legal Remedies Act prohibits “false or misleading statements of fact concerning reasons for, existence of, or amounts of price reductions.”
The complaint alleges that promotions such as those cited as limited time, are actually fake; that there was never a time restriction to the sale, and that the items represented as steeply discounted, were never at those original prices. Aldimassi contends that so-called limited time or blowout promotions are actually ongoing, but consumers, believing in the sense of urgency created by the retailer, were unfairly enticed to purchase items that are not a true discount, something the FTC strictly forbids in the marketplace. He contends that if the truth were known as to the real prevailing market price, most people, including himself, would not have purchased the promoted discount items.
The plaintiffs say they believe it to be unlikely that an exact number of unnamed plaintiffs in this case can be ascertained, but is estimated to be in the tens of thousands nationwide who may have purchased so-called discounted items alleged to be have been falsely promoted on Rugs' website.
Plaintiffs are seeking actual and treble damages, punitive damages, disgorgement by Rugs.com, an injunction to prevent continued consumer manipulation through deceptive pricing, court costs and legal fees and are demanding a trial by jury.
Plaintiff is represented by attorneys Christin Cho, Simon Franzini, and Grace Bennett of Dovel & Luner, of Santa Monica.