Accused of Fake Sale Pricing in California: Strike-Through Prices and the Three-Month Rule

Last updated: November 2026. Reviewed by Pavel Kolmogorov, California business litigation attorney (State Bar No. 321018).

Yes, a year-round crossed-out price can get a California seller sued. A struck-through "regular" or "was" price is a former price claim. Business and Professions Code section 17501 forbids advertising a former price unless it was the prevailing market price within the three months before the ad, or the ad clearly states when that price prevailed. A discount that never ends invites the claim that the regular price is fictitious. Kolmogorov Law, P.C. defends retailers and online brands in Orange County, Los Angeles, and across California against these claims.

Call (909) 235-6116 or contact us online to discuss a pricing demand letter or lawsuit.

What a fake sale pricing claim alleges

The story in the complaint rarely changes. A customer bought an item marked 40 percent off. The plaintiff's lawyers tracked the listing for months and say the item was never, or almost never, offered at the higher price. So the discount was an illusion, the customer says, and the purchase would not have happened without it.

Lawyers call this false reference pricing. The complaint usually pleads three California statutes together: the False Advertising Law, the Unfair Competition Law, and the Consumers Legal Remedies Act, which lists false or misleading statements about the existence or amounts of price reductions among its prohibited practices. (Civ. Code, § 1770, subd. (a)(13).) Many are filed as class actions.

A different pricing rule, on mandatory fees left out of the advertised price, is covered on our all-in pricing page.

The former price statute and its three-month test

The statute is short. No price may be advertised as a former price unless it was the prevailing market price within the three months immediately preceding the advertisement, or unless the date when it did prevail is clearly, exactly, and conspicuously stated. Prevailing market price means the retail price, for a retail offer, at the time and in the locality of the advertisement. (Bus. & Prof. Code, § 17501.)

Two points follow. First, the test looks at the market, and for a product only one company sells, that company's own price history is usually where both sides look. Second, the statute names no number of days an item must sit at full price. The question is what price prevailed over the three months.

Federal guidance points the same way. The Federal Trade Commission treats a former price as legitimate if it is the actual, bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time. A price inflated to make a later reduction look large is fictitious. (16 C.F.R. § 233.1(a).) Plaintiffs often quote the guide in their complaints.

California's broader false advertising statute also reaches untrue or misleading statements made over the Internet. (Bus. & Prof. Code, § 17500.) That section carries a criminal penalty too; our work is the civil side.

Why these complaints survive early motions

Sellers often start with a fair-sounding argument: the customer received the product and paid the price shown, so nobody was hurt. In federal court in California, that argument does not end the case at the pleading stage.

The Ninth Circuit considered a consumer who buys merchandise on the basis of false price information and alleges the purchase would not have been made otherwise. It held that such a consumer has suffered an economic injury and may sue under the Unfair Competition Law and the False Advertising Law. (Hinojos v. Kohl's Corp. (9th Cir. 2013) 718 F.3d 1098, 1107.) The same plaintiff has alleged damage under the Consumers Legal Remedies Act. (Id. at p. 1108.)

So the case is usually won or lost on the facts.

The records that defeat the claim

Pricing cases are data cases. The defense is built from records most sellers already have, if nobody deletes them:

Daily price history for each product at issue, covering at least the three months before the plaintiff's purchase.
Sales made at the regular price, with dates and quantities.
The calendar of promotions, showing when the item was and was not discounted.
For goods other retailers also carry, what those retailers charged.
The exact page, email, or tag the plaintiff saw, and the wording next to the struck-through number.
The terms of sale, including any arbitration clause and class waiver.

In my experience the first week's work is pulling this data. If it shows real periods at the regular price and real sales at that price, the claim is much weaker. If it shows a permanent sale, the conversation turns to exposure and to fixing the display.

What is at stake

Under the False Advertising Law and the Unfair Competition Law, a court may enjoin the practice and order restoration of money acquired through it. (Bus. & Prof. Code, §§ 17203, 17535.) How much must be restored is usually contested. Courts applying California law have measured restitution, where the buyer received something of value, by the difference between the price paid and the value received. The defense position is that a buyer who received goods worth what was paid has little or nothing to be returned.

The Consumers Legal Remedies Act adds damages and mandatory attorney fees for a prevailing plaintiff, described on our CLRA demand letter page. Public prosecutors may also sue, with civil penalties of up to $2,500 for each violation. (Bus. & Prof. Code, § 17206, subd. (a).) Class allegations multiply all of it, as explained on our page about a business named in a class action.

What to do when the letter arrives

Save the data before anyone touches the website. Price histories, promotion schedules, and archived pages should go under a litigation hold the same day. Then calendar the 30 days if the letter is a CLRA notice.

We analyze the price history against section 17501, test the named customer's purchase, and respond. We also advise on the display going forward, because an injunction claim can lose force once the practice has changed. These cases are filed in the Orange County and Los Angeles Superior Courts and, often, in the Central District of California. Competitor suits over advertising are a separate subject, covered on our Lanham Act false advertising page. The firm's broader defense work is described on our business litigation practice page.

What to bring to the first meeting

The demand letter or complaint.
Price and promotion history for the products named.
Screenshots or archived copies of the listing as the customer saw it.
Your terms of sale and business insurance policies.

Frequently asked questions

We show a crossed-out "regular price" next to our sale price all year. Could we be sued for that in California?

Yes, it can draw a lawsuit. Under section 17501 of the California Business and Professions Code, a seller may call a price a former price only if it prevailed in the market during the prior three months, unless the ad says exactly when it did. If the item is always on sale, a plaintiff will argue the regular price never prevailed. Whether that is true depends on your actual price and sales history.

Our products are sold only on our own website, so how does anyone decide what the prevailing market price was?

California's statute does not spell out a method, and courts treat it as a question of fact. For a product sold by one company, the practical evidence is that company's own history: the prices at which the item was offered and sold during the three months before the advertisement. Federal guidance asks whether the former price was offered in good faith for a reasonably substantial period.

What is false reference pricing?

False reference pricing is advertising a discount measured from a comparison price that was not genuine, such as a "was" or "regular" price the seller rarely or never charged. In California, plaintiffs challenge it under the former price statute, the Unfair Competition Law, and the Consumers Legal Remedies Act, usually in a class action brought by one purchaser.

How long must an item be at full price before a sale in California?

The California statute sets no number of days. It asks whether the advertised former price was the prevailing market price within the three months before the advertisement, or whether the ad clearly states the date when that price prevailed. No safe-harbor number appears in the text, so the answer comes from the price history.

What can a customer recover in a fake sale price lawsuit?

A court applying California's False Advertising Law or Unfair Competition Law can stop the practice and order money returned to buyers. The Consumers Legal Remedies Act allows damages and requires an award of attorney fees to a prevailing plaintiff. In a class action, those amounts are claimed for every purchaser in the class period.

Talk to a California business litigation attorney

If your business has received a pricing demand or complaint, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is located at 327 Magnet, Irvine, CA 92618, and defends businesses in Orange County, Los Angeles, and throughout California.

This page provides general information about California law and is not legal advice. Outcomes depend on the pricing history, the facts, and the court.