D.A.’s Office Announces $6.8 Million Judgment

(For Immediate Release)
February 20, 2014 (4:51 pm)

Alameda County District Attorney Nancy E. O’Malley announced today that internet retailer Overstock.com, Inc., has been found liable for violating California’s false advertising and unlawful business practice laws. The civil case was filed by the Alameda County District Attorney’s Office in the Alameda County Superior Court, the Honorable Wynne S. Carvill presiding. The Alameda County District Attorney’s Office was one of seven DA’s Offices from Northern California representing the People of California in the trial that resulted in the judgment against Overstock.com, Inc.

Overstock was found in violation of the laws protecting consumers from unfair business practices (Business and Professions Code Section 17200, et seq., and 17500, et seq) and the laws protecting consumers against false advertising (Civil Code Section 1770).

A major issue in the case was Overstock’s use of advertised reference prices, such as “List Price” or “Compare at.” It frequently displayed such reference prices in close proximity to the sales price, often with a purported discount, which it labeled “You Save” or “Save.”

An example of such advertisement is the following:

List Price: $999.00
Today’s Price: $449.99
You save: $549.01 (55%)

The First Amended Complaint alleged that reference prices of this kind were inaccurate or inflated to show a bigger discount or better deal than Overstock’s customers were actually receiving.

In a 93-page Statement of Decision, the Court found that Overstock had in fact engaged in false advertising and unfair business practices by displaying “List Prices” which had been created by the use of formulas; by displaying reference prices that were based not on the actual product being offered for sale, but on similar products, without adequate disclosure to consumers; and by displaying reference prices based on the highest price possible price that could be found in the market, again without adequate disclosures. “In sum,” the Court found, “Overstock has consistently used [advertised reference prices] in a manner designed to overstate the amount of savings to be enjoyed by shopping on the Overstock site.”

In its decision, now final, the Court imposed $6,828,000.00 in civil penalties against Overstock. The Court also imposed injunctive terms that require Overstock to more accurately display reference prices and to make fuller disclosures to consumers. Lastly, the Court held that Overstock may be ordered to pay the costs of suit that are allowed by law.

District Attorney O’Malley noted, “My Office is gratified by the Court’s thoughtful and thorough decision. As noted when the case was first filed, my Office takes seriously the protection of the public from false or misleading advertisements. We will continue to fight for the rights of consumers and for businesses to adhere to fair practices, including litigating cases through trial and verdict.”

The Alameda County District Attorney’s Office was joined in this action by the District Attorney Offices in the Counties of Sonoma, Marin, Monterey, Napa, Santa Clara, Santa Cruz, and Shasta.


DDA Matthew Beltramo
(510) 777-2237
Alameda County District Attorney’s Office

Posted on Feb 21, 2014