Hunton Retail Law Resource

Zara USA, Inc. (“Zara”), the popular European-based fashion retailer which boasts several celebrity clientele, has been targeted in a class action complaint filed in federal court, accused of allegedly carrying out a systematic “bait-and-switch” overpricing scheme. 

According to the complaint filed in U.S. District Court for the Central District of California by Mark Geragos, a well-known Southern California lawyer who represents the plaintiffs, Zara allegedly marked prices for certain goods in Euros, but then charged for the goods in U.S. dollars using greatly inflated exchange rates. The lawsuit is a putative class action, and according to Geragos, the total damages alleged could reach ten figures.

Although Zara is currently the only named defendant in the lawsuit, the complaint also alleges the existence of ten fictitious “Doe” defendants who are alleged to have acted in concert with Zara in its alleged scheme. Accordingly, it is likely that the complaint will be amended to include additional named defendants. Entities doing deals with retail counterparties – from vendors to service providers to commercial landlords – should take note.