Boohoo settles US lawsuit, reportedly calls for supplier discounts
Boohoo Group has settled a court case that had seen it accused of promoting fake discounts to US shoppers. The class action case had seen the fashion e-tail giant accused of “deceptive pricing” in which it would allegedly increase the full price of clothing to make subsequent discounts seem larger.
Boohoo had denied the allegations that were made in the lawsuit filed in May 2020 and has agreed to settle “without admission of liability”.
“The court has not determined who is right. Rather, the parties have agreed to settle the lawsuits to avoid the uncertainties and expenses associated with ongoing litigation,” a statement from KCC class action services said.
The settlement still requires court approval.
Those consumers affected by the issue on the US Nasty Gal, PrettyLittleThing and BoohooMan websites will get a $10 gift card and free shipping. It’s believed over nine million people were affected.
The potential value of the settlement is $197 million (£156 million), if every consumer takes up the offer. But of course, the issue is complicated by the fact that many might not, and those who do might also buy other items on top of the $10. What’s clear is that Boohoo isn’t paying a $197 million cash sum.
The news comes as a report on Friday also said that Boohoo Group has asked its suppliers for a 10% discount on orders, including those that have been delivered and those still on the way.
The Times quoted one anonymous supplier saying they’d received a call on Thursday demanding the discount and that applying it would turn all the orders into loss-making ones.
Last year the company had also extended its payment terms from 30 days to 60 days and in recent releases it has talked about controlling its costs. With some deflation seeping into the supply chain, it’s clearly seeking to get a grip on certain costs as soon as it can.
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