Boohoo is facing a 100 million dollar (81 million pound) lawsuit over claims by lawyers in the US that it is using fake sales and promotions.
US law firms Almadani Law and AI LawLawyers accuse the company of misleading shoppers by creating “sham sales” using fake ‘original’ prices on products against which the new ‘sale’ prices appear slashed.
The civil claim has been made against the fast-fashion retailer as well as its subsidiaries, PrettyLittleThing and Nasty Gal.
Documents filed in a Californian court and seen by the Telegraph said: “All the reference prices on Boohoo’s website are fake. They are not original, regular, retail or former prices. They are inflated prices posted to lure unsuspecting customers into jumping at a fake ‘bargain’.”
Ahmed Ibrahim of AI Law said: “The defendants need to come clean with their customers. They should admit what they’ve been doing is wrong, issue refunds... and immediately put a stop to the fake sales and false advertising.”
A Boohoo spokesperson told the Telegraph: “We are focused on bringing our customers designs that they love at affordable prices, and running promotions is just one of the ways that we invest in our customer proposition.”
Boohoo accused of promoting 'fake' sales
The Manchester-based company has grown at an extraordinary rate since it was founded in 2006, building its portfolio quickly by snapping up other struggling fashion brands. These include PrettyLittleThing, MissPap and NastyGal, as well as Karen Millen and Coast which it bought last year in a deal worth 18.2 million pounds.
In mid-May, the company announced it had raised 198 million pounds to finance further acquisitions.
Last week, it announced it had acquired the remaining 34 percent of shares in PrettyLittleThing from its minority shareholders Umar Kamani and Paul Papworth.
In the 12 months to February, the company’s revenue increased by 44 percent to 1.2 billion pounds.
Photo credit: Boohoo Group media gallery