By: Amy Berger
While the fashion industry has struggled during the COVID-19 pandemic, fast-fashion companies have been able to secure revenue in an unstable market. For millennials and Gen-Z alike, social media seems to be inundated with sponsored posts from fast-fashion brands. Influencers donning sweatpants from Fashion Nova, Boohoo, and other direct to consumer retailers seem ubiquitous in a world adjusting to quarantining. Even though Boohoo has been a clothing retailer since 2006, the company gained notoriety due to its pivot to inexpensive loungewear in 2020. While U.S. clothing sales plummeted by seventy-nine percent at the beginning of the pandemic, Boohoo’s sales grew forty-five percent in Europe and the U.S. in the months following mandatory lockdowns.[1] Even a company-wide audit, revealing that Boohoo workers are underpaid and forced to work in unsanitary working conditions, could not hinder Boohoo’s success.[2]
Boohoo would not be the formidable fast-fashion empire that it is today without its strategic acquisitions of smaller companies. PrettyLittleThing, a part of the Boohoo Group, has risen in popularity due to advertisements from the Kardashians and other influencers.[3] After Nasty Gal filed for bankruptcy in 2017, Boohoo quickly bought the company. Boohoo slashed prices and closed Nasty Gal’s only brick-and-mortar shop, the company once again became popular and profitable.[4] Customers flock to Boohoo, PrettyLittleThing, and Nasty Gal for their low prices and frequently advertised sales. Each of the brand’s landing pages are often emblazoned with sales boasting 40%, 50%, or 60% off of clothing items. Customers purchase from these brands because of the “substantial markdown and discount.”[5]
However, according to three class action suits, the prices were not reflective of a sale at all. Three parties have filed complaints against Boohoo, PrettyLittleThing, and Nasty Gal for advertising fake reference prices. Each of the now consolidated lawsuits against Boohoo, Nasty Gal, and PrettyLittleThing concern this alleged duplicitous pricing.[6] The plaintiffs assert that the companies violated California Unfair Competition Law, California False Advertising Law, and California Consumer Legal Remedies as customers flock to these sites expecting that “these products were truly on sale and being sold at a substantial markdown and discount.”[7] Each of the companies has “been accused of fraud in connection with an alleged scheme to inflate the original prices of their clothing.”[8]
On January 29, 2021, attorneys for PrettyLittleThing, Nasty Gal, and Boohoo filed virtually identical amended answers to the class action complaints.[9] Boohoo, Nasty Gal, and PrettyLittleThing have all refuted allegations that they are engaged in a “deceptive or false pricing scheme.”[10] Boohoo has also presented numerous affirmative defenses, including failure to state a claim and, most surprisingly, the First Amendment.
Boohoo alleged plaintiff’s complaint failed to state a claim and is “barred by the doctrines of estoppel, laches, unclean hands, waiver, and/or acquiescence.”[11] Boohoo claimed the suit should be barred because of First Amendment implications. According to the amended answer, changes in advertising language would infringe upon the companies’ rights to “promote and advertise the products.”[12] Furthermore, Boohoo’s amended complaint states consumers do not flock to Boohoo, Nasty Gal, and PrettyLittleThing based on sale pricing; rather, most customers “bought items for many different reasons that had no connection to the reference pricing, and without any misunderstanding as to what the Reference Price means.”[13]
Fast-fashion companies have always skirted controversy, including lawsuits, worker welfare concerns, and environmental issues. The relative ease of purchasing from a direct-to-consumer company combined with significantly low prices has outweighed the possible downsides of fast-fashion. These lawsuits could result in greater transparency in fast-fashion advertisements and production. The only certainty is that Boohoo and other fast-fashion companies will continue to grow.
[1] Jonathan Eley & Patricia Nilsson, Boohoo Lifts Forecast After First-Half Boost, Fin. Times (Sept. 30, 2020), https://www.ft.com/content/9617b3ef-668b-47f5-acef-8907c73f2989.
[2] Rachel Monroe, Ultra-Fast Fashion Is Eating the World, The Atlantic (Mar. 2021), https://www.theatlantic.com/magazine/archive/2021/03/ultra-fast-fashion-is-eating-the-world/617794/.
[3] Id.
[4] Id.
[5] Khan v. Boohoo.com USA, Inc, No: 2: 20-cv-03332 (C.D. Cal) (Apr. 9, 2020).
[6] Boohoo, Nasty Gal, PrettyLittleThing Push Back on Price Fraud Suits: “People Shop Because Our Prices are Cheap”, The Fashion Law (Feb. 4, 2021), https://www.thefashionlaw.com/boohoo-nasty-gal-prettylittlething-push-back-on-price-fraud-suits-people-shop-with-us-because-our-prices-are-cheap/.
[7] Khan v. Boohoo USA, Inc., No. 2:20-cv-03332-GW-JEM, 1, 2 (C.D. Cal.) (Sept. 4, 2020).
[8] Id.
[9] Boohoo, Nasty Gal, PrettyLittleThing Push Back on Price Fraud Suits: “People Shop Because Our Prices are Cheap”, The Fashion Law (Feb. 4, 2021), https://www.thefashionlaw.com/boohoo-nasty-gal-prettylittlething-push-back-on-price-fraud-suits-people-shop-with-us-because-our-prices-are-cheap/.
[10] Amended Answer to Second Amended Class Action Complaint by Defendants at 19, Khan v. Boohoo USA, Inc., No. 2:20-cv-03332-GW-JEM, (C.D. Cal.) (Jan. 29, 2021).
[11] Id.
[12] Id. at 23.
[13] Id. at 22.
