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Last post 9 years ago by Thunder.Gerbil. 14 replies replies.
MSRP Pricing and the FTC
midmofan Offline
#1 Posted:
Joined: 04-25-2014
Posts: 1,108
Since people seemed to like my gratuitous free regulatory analysis in the "I'm Concerned" thread, thought I would drop some more on y'all.

A lot of jokes are made around here about some of MSRP prices you see on different cigars (cough, cough, Gurkha) and how stupid it would be for anyone to ever pay that (even if you like the stick) since there always seems to be a sale or discount available.

The issue of MSRP vs. discounts/sales/special deals has been going on a long time. One of the best articles out there on the issue is actually from 1962. Here's a link:

http://scholarship.law.stjohns.edu/cgi/viewcontent.cgi?article=4332&context=lawreview

Don't be put off since its a law review article, its actually a very good, easy and informative read on the subject that gives you a history of the whole MSRP-concept and how that was changed after WWII by discount stores that had lower overhead, fewer employees and could survive on lower margins. The analysis in the article is even more pertenant to internet sales where there is often no physical store at all.

Reader Digest version: If something is always on sale, then its never really on sale, and even a few occasional listings and purchases at the MSRP price doesn't change that fact. Of course its always very fact specific and its very hard to draw hard and fast rules or conclusions

The biggest alleged offender of this recently that has been in the news has been Khols where they seem to have constant sales going on every day. (I have always wanted to find the one day - that I assume they have - where NOTHING is on sale and laugh at everybody that goes in)

Both state agencies and class action attorneys have gone after Khol's and others for misleading pricing and deceptive advertising of sales or discounts that were not really discounts or sales. I don't know if they did anything wrong or not, but it shows you people are concerned about the issue.

In Missouri several stores and retailers settled with the State after actions were filed alleging fake sales where the goods were never actually sold at the so-called pre-sale price.

The problem for the companies selling things, of course, is how can you compete when everybody else is offering "Sales" all the time in the mail, om tv and the internet? J.C Penney (who was also sued for "fake" sales along with Khols in several of the actions) tried to go to a more honest pricing model where they gave you fair, real, accurate prices everyday and didn't rely on constant sales where they took a % off of MSRP's that they never really sold things for in the first place

Penneys then got creamed in the marketplace, losing huge amounts of business, customers and revenue. CEO gets fired and they go back to constant coupons and "sales." Turns out people wanted those 30% off coupons! I read an report on this at some-point where the researchers said that even those people who realize that the goods are never really sold at the MSRP still preferred the coupons and sales as it made them feel like they were getting a good deal.

I actually myself caught an employee at closing time in a store putting high prices on products so that they could be put on a 50% off sale the next day with the new sale price actually being higher than the price they were being sold for the previous day! Scored myself a pretty good deal at a high-end men's clothing store after pointing out to the manager that what the employee was doing was exactly what they Attorney General had just sued people for allegedly doing and that I would have a pretty could lawsuit for what I just saw. Needless to say, I settled out of coat, uh, er, court Drool

So, bottom line, the issue of MSRP vs. actual price has been one fought for over 60 years from the very beginnings of the FTC and other consumer agencies. No matter what the law is, however, an informed consumer is still the only real protection there is. Everything is out there for you to discover if you just look hard enough, even they brand of cigar Elvis is currently smoking on Venus!
opelmanta1900 Offline
#2 Posted:
Joined: 01-10-2012
Posts: 13,954
either trish or a gurkha representative should be along to kill you shortly... hope you enjoyed your stay...
TIGERCDW Offline
#3 Posted:
Joined: 09-17-2009
Posts: 7,897
opelmanta1900 wrote:
either trish or a gurkha representative should be along to kill you shortly... hope you enjoyed your stay...


LMFAO

TIGER
midmofan Offline
#4 Posted:
Joined: 04-25-2014
Posts: 1,108
opelmanta1900 wrote:
either trish or a gurkha representative should be along to kill you shortly... hope you enjoyed your stay...


Gosh, golly, gee, didn't say or even imply that anybody is doing anything wrong....


...unless Elvis is smoking a Gurkha.... Angel
victor809 Offline
#5 Posted:
Joined: 10-14-2011
Posts: 23,866
midmofan wrote:
Scored myself a pretty good deal at a high-end men's clothing store after pointing out to the manager that what the employee was doing was exactly what they Attorney General had just sued people for allegedly doing and that I would have a pretty could lawsuit for what I just saw. Needless to say, I settled out of coat, uh, er, court Drool



Does this count as extortion?
Abrignac Offline
#6 Posted:
Joined: 02-24-2012
Posts: 17,216
midmofan wrote:


Too much time on my hands
It's ticking away with my sanity
I've got too much time on my hands
It's hard to believe such a calamity
I've got too much time on my hands
And it's ticking away, ticking away from me

BuckyB93 Offline
#7 Posted:
Joined: 07-16-2004
Posts: 14,110
Car dealers seem like they could fall into this category.

Presidents day sale month, 4th of July monthly sales, spring sales, summer blow out sales, end of the model year sales, get your wife a new car for Christmas sale, Tax return season sale.... Are cars never on "sale?"
midmofan Offline
#8 Posted:
Joined: 04-25-2014
Posts: 1,108
victor809 wrote:
Does this count as extortion?


Surely you knew I would know this one!


The federal courts generally don’t consider any litigation threats to be extortionate. Sosa v. DIRECTV, Inc., 437 F.3d 923, 939–940 (9th Cir. 2006)(“we do not believe the Hobbs Act imposes liability for threats of litigation where the asserted claims do not rise to the level of a sham.”); United States v. Pendergraft, 297 F.3d 1198, 1208 (11th Cir.2002)(holding threats to sue a public entity cannot constitute Hobbs Act extortion, even where supported by false testimony and fabricated evidence); I.S. Joseph Co. v. J. Lauritzen A/S, 751 F.2d 265, 267 (8th Cir. 1984) (holding threats of groundless litigation cannot constitute extortion under the Hobbs Act); cf. Vemco, Inc. v. Camardella, 23 F.3d 129, 134 (6th Cir.1994) (holding threats to enforce even a fraudulent contract not extortion under RICO); but see United States v. Sturm, 870 F.2d 769, 774 (1st Cir. 1989)(“a Hobbs Act prosecution may be based on a creditor’s fear of nonrepayment”).
KingoftheCove Offline
#9 Posted:
Joined: 10-08-2011
Posts: 7,600
midmofan wrote:
Gosh, golly, gee, didn't say or even imply that anybody is doing anything wrong....


ha ha ha ha!!
you think that MATTERS?!
bring a coat and a flashlight........it's kinda cold and dark there
KingoftheCove Offline
#10 Posted:
Joined: 10-08-2011
Posts: 7,600
BuckyB93 wrote:
Are cars never on "sale?"

yeah.........when the Honda Fit first hit the market in California a few years back........they were most definitely NOT on sale, for a LONG time
victor809 Offline
#11 Posted:
Joined: 10-14-2011
Posts: 23,866
midmofan wrote:
Surely you knew I would know this one!


The federal courts generally don’t consider any litigation threats to be extortionate. Sosa v. DIRECTV, Inc., 437 F.3d 923, 939–940 (9th Cir. 2006)(“we do not believe the Hobbs Act imposes liability for threats of litigation where the asserted claims do not rise to the level of a sham.”); United States v. Pendergraft, 297 F.3d 1198, 1208 (11th Cir.2002)(holding threats to sue a public entity cannot constitute Hobbs Act extortion, even where supported by false testimony and fabricated evidence); I.S. Joseph Co. v. J. Lauritzen A/S, 751 F.2d 265, 267 (8th Cir. 1984) (holding threats of groundless litigation cannot constitute extortion under the Hobbs Act); cf. Vemco, Inc. v. Camardella, 23 F.3d 129, 134 (6th Cir.1994) (holding threats to enforce even a fraudulent contract not extortion under RICO); but see United States v. Sturm, 870 F.2d 769, 774 (1st Cir. 1989)(“a Hobbs Act prosecution may be based on a creditor’s fear of nonrepayment”).


Nicely done.
Buckwheat Offline
#12 Posted:
Joined: 04-15-2004
Posts: 12,251
It would be criminal to pay one cent less than the MSRP cost for my new Rolls Royce Phantom. Sarcasm
edwarderc2 Offline
#13 Posted:
Joined: 04-26-2006
Posts: 1,005
#"
In many states, including New York, cars are always 'for sale", but cannot be advertised as "on sale" by individual dealerships.
Thunder.Gerbil Offline
#14 Posted:
Joined: 11-02-2006
Posts: 121,359
Cigar manufacturers and online cigar vendors would never do anything like that.

Pinky swear.
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