Don't Let Strike-Through Pricing Strike Out Your DTC Website: Comparison Pricing Is Effective, But Carries Risk

As consumer brands look to expand direct-to-consumer (DTC) sales, they often seek to distinguish their online stores through comparison or strike-through pricing on a product display page where a higher reference price is listed, crossed out, and the "discounted" lower price is listed next to it. This is a great marketing tool, as it makes the price reduction more tangible to the customer. We all love to feel like we are getting a good deal.

The problem is that sometimes these promotions can be portrayed as misleading to consumers and even illegal under applicable law. To make matters more complicated, determining which law applies in this area is not straightforward, as both federal regulations and state statutes may apply, with material differences across jurisdictions. Not surprisingly, California has become a hotbed for these types of misleading pricing claims, which are typically asserted as class-action lawsuits.