Facts

The State of California sued online retailer Overstock.com Inc., in connection with the retailer's online advertising practices.

PLAINTIFF'S CONTENTIONS:
Plaintiff contended that the online retailer routinely and systematically made untrue and misleading comparative advertising claims about the prices of its products by using misleading measures to inflate the comparative prices, thereby artificially increasing the discounts it claimed to be offering to consumers.

Plaintiff alleged causes of action for violating California Business and Professions Code Sections 17500 and 17536 by making untrue and misleading statements concerning pricing; violation Section 17200 and Civil Code Section 1770(A)(13) by making false or misleading statements of facts concerning reasons for, existence of, or amounts of price reductions; violation of Sections 17500 and 17536 for making untrue and misleading statements concerning source of products; violation of the same statutes for untrue and misleading statements concerning shipping charges; and violation of Section 17200 for unlawful and business practices, including violation of Section 17500. The People sought an injunction and monetary relief in an amount no less than $15 million.

DEFENDANT'S CONTENTIONS:
Overstock denied plaintiff's allegations and asserted various affirmative defenses.

Result

The court denied Overstock's motions for judgment, and found that the company violated the law as alleged by the People in the first and fifth causes of action for violations of the Business and Professions Code. The court then ordered Overstock to pay $6,828,000 in civil penalties. In addition, the court enjoined Overstock from engaging in advertising an "advertised reference price," based on a formula, multiplier, or other method except as otherwise permitted. The court also issued additional injunctive terms relating to, among other things, the use of advertised reference prices based on similar but non-identical products.