I don’t know if you've been following the news, but an unusually high number of companies are facing legal challenges this year over unfair or deceptive pricing practices.
In March, Apple was hit with multiple consumer lawsuits from iPhone owners, accusing it of monopolizing the smartphone market.
This came after the Justice Department and 15 states filed an antitrust lawsuit against Apple. At least three proposed class actions in California and New Jersey allege that Apple inflated product costs through anti-competitive practices.
In July, a federal appeals court ruled that Walmart must face a class-action lawsuit claiming that it often charged higher prices at the register than those displayed on shelves. The lawsuit alleges that these discrepancies cost consumers hundreds of millions of dollars each year, amounting to a "bait-and-switch" scheme.
In August, the Washington D.C. Attorney General sued StubHub, accusing the company of misleading consumers about ticket prices by adding hidden fees at checkout.
Shortly after, Australia’s consumer watchdog filed lawsuits against supermarket chains Coles and Woolworths for allegedly misleading shoppers with false discounts. These lawsuits claim the chains maintained steady prices on certain products, then raised them to create the illusion of discounts.
That same month, the Canadian Competition Tribunal fined Cineplex nearly $39 million for deceptive practices, specifically for adding a mandatory $1.50 online booking fee that was in place from June 2022 to December 2023.
By November 2024, Under Armour faced a proposed class-action lawsuit claiming it used a “false, misleading, and deceptive pricing scheme” at its factory outlet stores and online, misleading customers about the actual value of discounts.
These are just the big names, but they represent a growing trend in which major companies are being called out for these questionable practices. So, why are these lawsuits becoming more common, and do they hold any merit?
If you’re a critical thinker like me, this may seem odd. Why would well-known brands risk lawsuits and potential damage to their reputation?
It’s tempting to believe it could be an honest mistake, but the sheer number of similar cases suggests otherwise. These companies likely know exactly what they’re doing. Some have even been caught before, yet they continue the same practices.
Consider Walmart, which was fined $2 million in 2012 by a California court for failing to resolve checkout pricing errors after a 2008 ruling. In 2015, StubHub settled a lawsuit with the State of New York for $1.35 million over allegations of deceptive ticket pricing practices, including hidden fees.
So, why would they risk repeating these offenses?
It’s possible that the cases filed against these brands lack merit and will eventually be dismissed. However, the fact that many choose to settle rather than fight these claims could indicate guilt or a desire to avoid prolonged legal battles.
Truth is, brands repeat these deceptive pricing tactics because, strangely enough, it can actually pay off, even with the occasional lawsuit.
Think of it like a casino game. If a company can make millions through small, consistent price markups across thousands of transactions, then paying a fine here and there is just the cost of playing.
Each hidden fee is like a tiny scoop taken from a giant pot of money. Individually, each fee might seem trivial, but across millions of transactions, it piles up fast. Even if they’re fined once or twice, they’ve already profited significantly from those “scoops.”
Most consumers either don’t notice these extra charges or find it too much trouble to complain, allowing companies to make additional revenue with little resistance.
Like an athlete pushing the limits of the rules, big brands test how far they can go without crossing the line, knowing they’ll likely make enough profit to justify any occasional fine.
But how does this strategy work for smaller companies? For them, attempting similar tactics is far riskier. Unlike big corporations, which can absorb legal costs and withstand bad press, smaller companies have fewer resources to protect themselves if caught.
Legal expenses alone can eat up profits, possibly crippling the business. For a small company that relies on community trust and word-of-mouth, a single scandal could ruin its reputation, making consumers wary of engaging with it again.
In the end, deceptive practices for a smaller business aren’t just a financial gamble; they are a threat to its survival. While big brands might get away with such tactics, for a small business, it’s more like playing with fire—easy to get burned and hard to recover.
So, how should an online business like yours play the game?
Needless to say, this isn’t a direction any business, big or small, should pursue. Instead of risking everything with deceptive pricing, focus on building a strategy that enhances transparency and builds trust.
Start by adopting a value-based pricing approach, setting prices that reflect the real value your product brings to customers. When customers feel they’re getting their money’s worth, they’re more likely to buy from you and remain loyal to your brand.
Make your pricing straightforward and consistent across all platforms. Avoid hidden fees or surprise charges at checkout that could make customers feel deceived. Aim for an “all-in” approach where the final price includes everything, from taxes to shipping. This clarity builds trust and confidence in your brand.
Consider a tiered pricing model. Offering different levels of your product or service at various price points gives customers the flexibility to choose what best fits their needs and budget.
For example, if you run a subscription box service, offer basic, standard, and premium versions, each with increasing value. This way, customers feel they’re getting a good deal, no matter which option they choose.
Occasional discounts or promotions are great, but make sure they’re genuine. Instead of inflating prices just to mark them down, go for seasonal sales or loyalty rewards that provide real value. Authentic discounts build customer trust and goodwill.
Lastly, use customer feedback to refine your pricing. Regularly check in with customers through surveys or reviews to gauge whether they find your prices fair. This feedback lets you make adjustments to keep your audience happy and your reputation strong.
By developing a pricing strategy that’s transparent, value-driven, and customer-centered, you’re setting yourself up for long-term success. Instead of playing with fire, focus on a strategy that builds loyal customers, promotes growth, and keeps your business firmly on the right path.
I hope this provides you with a clear perspective on the hidden costs of deceptive pricing and the long-term rewards of transparency.
Building trust through honest practices not only protects your brand but also fosters lasting relationships with customers. In the end, a strategy rooted in integrity is your best path to sustainable success.