For release on February 20, 2014
Supervising Deputy District Attorney
Consumer Protection Unit
OVERSTOCK MUST PAY $6.8 MILLION FOR DECEPTIVE COMPARISON PRICING
After a trial, Overstock.com, the popular online seller, has been ordered to pay $6.8 million after being found to have used deceptive advertising that gave consumers the false illusion that they were getting a bigger bargain.
Alameda Judge Wynne Carville found that Utah-based, internet retailer Overstock.com had violated California laws intended to protect consumers from deceptive advertising practices and unlawful business practices by advertising comparison prices on its website that were not always truthful.
In its decision the court held that the evidence proved that Overstock.com used formulas to create fictional comparison prices. In other cases, Overstock.com intentionally chose the highest comparison price for an item, without disclosing that to the consumer.
Deputy District Attorney Tina Nunes Ober said: “This is a tremendous victory for all consumers. The court clearly signaled that deceptive advertising is unlawful and will not be tolerated. Consumers should always be cautious in all transactions however, they have a right to expect truthful advertising. In addition, this decision protects businesses that follow the law.”
The Office of the Santa Clara County District Attorney, together with the District Attorneys of Alameda, Marin, Monterey, Napa, Santa Cruz, Shasta and Sonoma, filed a civil prosecution against the retailer in November 2010 after an investigation which began in 2007. The case culminated in a two-week trial in September 2013. The final judgment was entered today.
The court found for the California prosecutors after hearing testimony from four consumers, expert witnesses, and reviewing hundreds of documents. Overstock CEO Patrick Byrne testified.
Under the Final Judgment, Overstock must pay $6.8 million in civil penalties and costs to the California prosecutors. Santa Clara County is expected to get about $850,000 which it will use to investigate and prosecute consumer protection cases.