NEWS RELEASE

FROM:
Amy Cornell, Public Information Officer
(408) 792-2997

CONTACT PERSON:
Kenneth Rosenblatt, Supervising Deputy District Attorney
Consumer Protection Unit
(408) 792-2572   For release on November 17, 2010, at 2:00 p.m.     PROSECUTORS SUE OVERSTOCK.COM, INC., FOR FALSE ADVERTISING;
SEEK INJUNCTION, RESTITUTION, AND $15 MILLION IN CIVIL PENALTIES   The District Attorneys of Napa, Alameda, Marin, Monterey, Santa Clara, Shasta, and Sonoma Counties in California filed a civil lawsuit in Alameda County today against Overstock.com, Inc., seeking an injunction against the Internet retailer and $15 million in restitution and civil penalties. Overstock is accused of “routinely and systematically” making untrue and misleading claims about the prices of its products since January 1, 2006.   In one example cited in the lawsuit, Overstock advertised a patio set for $449.99 and claimed that the “List Price” for the set was $999.00. The furniture arrived with a Wal-Mart sticker showing the price to be $247.00.   The complaint alleges that instead of comparing its “Today’s Prices” with prices charged by other merchants, Overstock often made up “list prices” and “compare at prices” based on arbitrary markups over its cost for the product. In many cases, Overstock fabricated a fictitious comparison price—and claimed that it was offering a discount off that price—even when it was the only seller of that product.   The lawsuit also alleges that in other cases, Overstock inflated its claimed “discounts” by advertising as its comparison price the highest retail price at which other merchants sold the same products. The lawsuit also notes that Business Week reported in 2004 that its survey of Overstock products revealed that Overstock was overstating its comparison prices. (BW Online, 3/15/04.)   “Overstock's misrepresentations about its pricing were likely to mislead consumers into believing that Overstock's prices would always be significantly lower than the prices offered by other merchants for the identical products. Such misrepresentations were likely to discourage consumers from making the effort to search elsewhere for lower prices. In our opinion, this conduct constitutes untrue or misleading advertising, and legal action is necessary to protect our consumers from such practices,” said District Attorney Dolores A. Carr.   A link to the lawsuit is available on the Santa Clara County District Attorney’s web site www.santaclara-da.org under the news and events tab, then select news releases.    ###  ​ Attachments

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