Boohoo has reportedly reached a final settlement in a protracted class action lawsuit brought by American consumers who claim that the British fast fashion firm employed false and deceptive pricing practices to drive sales.
Plaintiffs Laura Habberfield, Keona Kalu, Katie Runnells, Juanita Carmet Cachadina, Sarah Huebner, Yesenia Valiente, Veronica Walton, Lisa Murphy, Nicole Hill and Nicole Stewart filed the class action complaint against Boohoo on June 22, 2022, alleging that the brand’s global e-commerce sites, along with owned entities like PrettyLittleThing and Nasty Gal, advertised “fake and inflated comparison reference prices to deceive customers into a false belief that the sale price is a deeply discounted bargain price.”
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The suit said that shoppers who visit Boohoo’s site during one of its blowout 50-percent-off sales and purchase a dress “on sale” for $20 based on a crossed-out reference price of $40 are being bamboozled. “This is deception because that dress has rarely, if ever, been sold in the recent past on the site for $40,” the suit said. In other words, Boohoo’s sales “aren’t really sales at all,” it added—“They are a scam.”
According to the complaint, the defendants engaged in the “deceptive advertising and pricing scheme” in order to “lure unsuspecting customers into jumping at a fake ‘bargain.’” As a result, the plaintiffs argued they were swindled into shelling out on items they wouldn’t have otherwise purchased.
Reuters reported this week that the fast-fashion e-tailer confirmed that the settlement—which was agreed upon in preliminary terms in November—was finalized last Tuesday. Boohoo said it would “move forward without admission of liability and within its existing legal provisions,” which amounted to 17.8 million pounds ($22.4 million) as of Feb. 28, the outlet said.
According to the final settlement agreement, each of the named plaintiffs will receive a $1,000 payout, while class counsel will receive $3 million in attorney fees as well as costs totaling $38,788. The claims administrator, Kurtzman Carson Consultants, LLC is entitled to $1 million for settlement administration costs, while $1.16 million will be split between the National Consumer Law Center and BBB National Programs, Inc.
Boohoo and the other defendants will also provide one or more $10 gift cards with free shipping to consumers across the U.S. who purchased their products between April 1, 2016 and June 17, 2022.
The settlement must be reviewed and approved by the U.S. District Court for the Central District of California before it moves forward.
Notably, though, California shoppers are excluded from this resolution—though shoppers living in all other 49 states may see restitution from the brand. That’s because the claims of California class-action plaintiffs were settled in a written agreement last May.
That class action suit, brought by Farid Khan, Haya Hilton and Olivia Lee against Boohoo, PrettyLittleThing and Nasty Gal in a Los Angeles district court in December 2020, also centered on the sites’ liberal use of phony promotions to drive consumers to spend.
While the discovery conducted in both cases against Boohoo overlaps, the parties involved in the secondary Habberfield case agreed to conduct supplemental discovery for due diligence purposes.
The lawsuit saga may finally be in the rearview for Boohoo, but turmoil appears to be brewing within the walls of the Manchester, UK fast-fashion firm.
January saw the exit of several high-ranking brand leaders, including chief financial officer Shaun McCabe, trading director Sam Brocklebank, wholesale and product operations director Marie Laskowski, and product director Claire Asher. Within weeks, it announced the shuttering of its Daventry distribution center in the village of Crick in England’s Northamptonshire, instigating the layoffs of 400 workers.
And earlier this month, the firm, which funneled massive funding into the construction of its Leicester “Center of Excellence” in 2022, announced that the apparel factory is up for sale, having halted operations in January. According to Boohoo, 100 garment workers were laid off or reassigned as the group wound down operations.
