T.J. Maxx is the price reduction giant that sells itself on offering some of the best bargains in the business, but the discount dealer is under fire for one of its pricing practices.
Two people have filed a proposed class-action lawsuit against the parent company of T.J. Maxx, TJX Cos. Inc., claiming it is “using deceptive comparative prices to trick its customers into mistakenly believing they are saving specific and substantial amounts on name brand items.”
The proposed class-action suit, which takes aim at the chain’s use of “Compare At” prices on price tags, was filed July 17 in California federal court.
T.J. Maxx responded to the lawsuit in a statement to ABC News.
“We tell our customers what we mean by ‘Compare At’ prices, both through signage in our stores as well as language on our T.J. Maxx website. Transparency is important to us and integrity is ingrained in our culture. Beyond that, we do not comment on pending litigation.”
Lauren Lyster, a correspondent for Yahoo Finance, says the proposed lawsuit makes the claim that T.J. Maxx should be clearer in its pricing.
“What this case is arguing is that they should just be more clear, that the average consumer may not see those signs and, in fact, will be looking at this price tag and not really understanding what that price that is compared at actually means,” Lyster told ABC News.
“Good Morning America” special correspondent Becky Worley went to a T.J. Maxx store in San Jose, California, Wednesday, to examine the pricing herself.
Worley saw the “Compare At” signage posted at the store’s door but the price on a Michael Kors purse she found was not so clear.
The store’s “Compare At” price on the purse was $328 but the manufacturer’s suggested retail price was only $228.
When Worley searched for the purse online, she found it available at a price way under the T.J. Maxx “Compare At” price. The purse was priced at $278 on the websites of both Macy’s and Neiman Marcus department stores.
Overall, in Worley’s brief visit to one T.J. Maxx store, most of the “Compare At” prices seemed appropriate, but some were not.
A five-pack of men’s undershirts said “Compare At” $30, which was the same price T.J. Maxx was offering. A quick check online found the same five-pack of undershirts available for $19.99 on Macy’s website.
Shopping expert Lisa Lee Freeman says consumers need to educate themselves about different sales techniques to make the right choices.
"One practice, like the “Compare At” information used by T.J. Maxx, is price anchoring," Freeman said today on "GMA." "Basically they give you a few reference points, or one reference point, to show you what a great deal you're getting.”
Other techniques used by retailers, according to Freeman, include cross-outs, where stores cross out the original price and then show you the sale price to try to show you how much you are saving.
“Whether it’s legit or not, you think, ‘Fabulous,’ and you snap it up,” Freeman told “GMA."
A second pricing technique, Freeman says, is “Goldilocks pricing,” where stores want you to spend a certain amount on an item.
In order to get you to the price, Freeman says, retailers will offer a higher price option, which is maybe more than you want to spend, and a cheaper option, which is maybe too bare-bones, with the end result of steering you to the middle price option, at the amount the store wants you to spend.
Two more pricing techniques Freeman says stores use include multiple-unit pricing, where stores say “10 for $10,” when you can really just buy one unit to get the sale, and limited quantities, where stores limit the number of items for sale per customer.
“To protect yourself, bring your cellphone with you, your smartphone, check prices while you’re in the store,” Freeman said. “Don’t buy anything if you don’t really need it … it may not be as big of a bargain as you think.”
“And, finally, see if there’s a coupon.”