What Does `Regular Price' Mean?

What does `regular price' mean?

Is your favorite store having a sale, or is it only the illusion of a sale?

Sometimes it's hard to know unless you have followed the price of an item for a substantial period of time.

For instance, if you read that a product is being sold at ``50 percent off,'' can you recall what the price was a month ago? Six months ago?

It may be worth checking past advertising so you know what the ``regular'' price was.

That kind of advertising is called reference or comparative pricing, and it's in the spotlight again as a result of a court case in Colorado.

A Denver district court judge recently ruled that May D&F, a unit of May Department Stores Co., used fictitious prices to make customers think they were getting a discount when the store advertised sales.

Colorado's attorney general charged May D&F had deceived consumers in advertising for four years, in violation of the Colorado Consumer Protection Act.

Denver District Court Judge Larry J. Naves said that ``the clear expectation of May D&F was to sell all, or practically all, merchandise at its `sale' price,'' and that the store's original and regular prices were not bona fide, but were artificially inflated to use for advertising purposes later.

The judge permanently enjoined May D&F from advertising ``regular'' or ``original'' prices, if their meaning will not be commonly understood by consumers. To make prices clear, the company may have to disclose its sale price terms and the method of establishing its ``original'' prices, the judge said.

Representatives of May D&F would not discuss the decision in detail, but have released a statement from William Sander, chairman of the corporation.

``We are disappointed by the decision. We believe our advertising practices are fair and appropriate and they are not designed to support false advertising claims. We are considering an appeal. We will, of course, comply fully with whatever final orders come from the court,'' Sander said.

The state's complaint covered most of the merchandise in May D&F's 12 Colorado stores, said Garth C. Lucero, first assistant attorney general in Colorado's Department of Law. However, cosmetics and clothing were not involved.

Lucero said the state has had informal agreements over pricing techniques and disputes with May D&F since the early 1980s.

Several years ago a consumer complained to Colorado's attorney general about a transaction with the store.

Having received duplicate wedding gifts, a newlywed couple decided to return one set of knives. The pricetag and shelf price for the knives read $50, but the store wanted to refund only $29.99, Lucero said.

A dispute ensued over what the original price had been and the consumer eventually complained to the state.

Lucero said the store contended on this product and others that it had set an ``original'' price for 10 days at the beginning of six months, then changed to a sale price.

Lucero said May D&F now is using 28 out of 90 days as a yardstick for a ``regular'' or ``original'' price. But the judge also said the store must set a bona fide price at which it expects to make sales, measured by markups and the prices of competitors.

A May D&F representative said the company has revised its advertising according to the court decision.

Though that decision does not affect retailers elsewhere, it could have a ripple effect in the long term.

The Council of Better Business Bureaus and a group of retailers also have been working on voluntary guidelines on this subject.

There is no ``magic'' time that makes a price ``regular'' or ``original,'' said Steven Cole, vice president and general counsel for the Council of BBBs.

But Cole said the task force is considering a yardstick of 51 percent as a guideline for the time a price would have to exist to be a ``regular'' or ``original'' price.

However, time is only one aspect, Cole said. What happens if the price is too high and never is accepted by consumers? Is the price then too high to be used for comparison or reference pricing?

Cole said there have been concerns in the retail area about unfair advertising and prices, and one of the goals of the BBB task force is to create a ``level playing field'' so merchants may compete fairly with one another.

The BBB task force now is waiting for comments from the Federal Trade Commission on the suggested guidelines. Part of the process involves getting merchants to buy into the guidelines and make a public commitment.

Shelby Gilje's Troubleshooter column appears Sunday through Thursday in the Scene section of The Times.