Harbor Freight class-action lawsuit alleging deceptive pricing

[Jon]

Harbor Freight being sued for monkeying around with its pricing? What a surprise!

This class-action lawsuit, Beck v. Harbor Freight, is about Harbor Freight's alleged improper advertising of items as being "on sale", and their questionable use of "comp at" (compare at) phrasing.

Harbor Freight isn't the only one getting in trouble for this type of activity. Other similarly-troubled retailers include Macy's, Bloomingdale's, Kohl's, and Kate Spade.

This has to do with a cognitive bias called anchoring, and, in this case, is related to pricing concepts like: Law of one price, Price dispersion, Equilibrium price, and Price discrimination.

Anchoring means that we heavily anchor our decisions based on initial pieces of information. So, if a retailer is selling something for $19.99, and the price tag says stuff like: "Compare at $49.99", or "Previous price: $39.99", we anchor our evaluation of the price to those pieces of information, thus convincing ourselves that the $19.99 price must be a great deal. The legal problem occurs when such an item was never in fact sold by this retailer for $39.99, and is not sold by anyone else for $49.99.

I don't know enough to know whether this really should be illegal, or is just unethical. I do know that this strategy is diminishing in effectiveness on the web. Not only do we have gobs of comparative pricing information available, simply by visiting other websites, but we can also just search for the product in a search engine, or use a price comparison site like CamelCamelCamel.com for Amazon, or, for Harbor Freight, a coupon website like HFQPDB.com.

Previously:
Harbor Freight coupon database website
Homemade tools made with Harbor Freight tools