The sign in the jewelry store window says "60% OFF!"
Can such a bargain be true?
What is this jewelry really worth?
The unfortunate truth is that many jewelry retailers artificially inflate prices so they can lure customers with spectacular discounts. (Check your Sunday newspaper supplements!)
In one highly publicized legal case, the state of North Carolina charged J.C. Penny Co. with deceptive advertising for grossly marking up prices prior to advertising sales. The state law requires that a "bona fide" original price be offered to the public "for a reasonably substantial period of time." The attorney general's office presented evidence that, for one jewelry item in question, only 3% of sales were at the so-called regular price, the remaining 97% being made at the discounted price. Often these retailers write an appraisal for the inflated amount, and then present the appraisal as proof of the jewelry's worth.
The three-week trial in North Carolina Superior Court examined not only J.C. Penny's practices, but also practices of other multi-unit jewelry chains.
In a surprising and quite disheartening decision, the court ruled that J.C. Penny was not guilty because the deceptive practice was so widespread. The judge said the defendant was only trying to be competitive "in an industry where very few businesses make any effort to comply with the letter or the spirit of the law." He added that to single out one merchant for prosecution "in an industry that appears dominated by many violators" could be viewed as unfair.
Representatives of the jewelry industry say that the laws governing advertising are extremely vague. In the absence of specific legal definitions, it is a matter of interpretation what constitutes an honest price compared with an inflated price, or for what period of time a sale price may be in effect.
Meanwhile, as the judge in the above case asked, where are the consumer complaints? The suit against J.C. Penny was brought by its competitors. The customers, who bought their jewelry at "60% off regular price," presumably walked away quite pleased with what they believed to be a bargain. They never comparison shopped.