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Overstock.com sued for overstating discounts

By Annalyn Censky, staff reporter


NEW YORK (CNNMoney.com) -- A group of district attorneys in California is suing Overstock.com for $15 million, accusing the online discounter of overstating its deals and misleading consumers.

The attorneys filed a 33-page complaint in Alameda County Superior Court late Wednesday, arguing that Overstock.com (OSTK) should pay a minimum of $15 million in fines and restitution for "routinely and systematically" making untrue and misleading claims about the prices of its products.

The lawsuit cites an example where Overstock allegedly advertised a patio set for $449.99 and claimed that the "List Price" for the set was $999. But the furniture arrived with a Wal-Mart sticker showing the price to be $247.

The complaint accuses Overstock of often making up "list prices" and "compare at prices."

"In our opinion, this conduct constitutes untrue or misleading advertising, and legal action is necessary to protect our consumers from such practices," District Attorney Dolores A. Carr. said in a statement.

Overstock fired back with a statement of its own, claiming it has been in discussions with the attorneys for several years and was disappointed the conflict resulted in a court case.

"Overstock.com stands by all our advertising practices, including providing comparison values which we thoroughly explain on our site," Jonathan Johnson, President of Overstock.com said in a statement. "We have been singled out for standard industry practices, which we look forward to demonstrating in court."

The lawsuit seems to come at a "strategically-timed moment," Overstock said. Black Friday, one of the largest shopping day of the year, is next week. To top of page

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