Nike, Lululemon Sued Over Fake Discount Pricing

Nike and Lululemon just got sued over three words that show up on every product page of nearly every high-ticket dropshipping store: was, now, and the strikethrough line between them.

Two California class actions filed in the last two weeks accuse both brands of inventing “regular” prices just to make the sale price look bigger. Lululemon allegedly priced a pair of Wunder Train tights at $59 next to a struck-through $98, even though the tights reportedly hadn’t sold for $98 since October 2025. Nike allegedly did the same with a pair of Air Max sneakers, running a $190 reference price against shoes that had been marked down continuously for six straight months.

This isn’t really a story about two apparel giants with legal budgets that dwarf a niche store. It’s a story about the exact pricing display every high-ticket dropshipping store on Ecommerce Paradise runs by default, whether you’re selling patio furniture or one of the thousand-plus niches I track: MSRP crossed out, your price underneath, a percentage saved in bold. That layout is the entire visual language of high-ticket ecommerce. According to a growing pile of California lawsuits, it’s also a legal liability if the “was” price doesn’t hold up.

Filings like these have roughly doubled year over year, and they’re not slowing down. Below: what actually happened, why phantom discount suits are suddenly everywhere, what this means for a store running MSRP-based pricing at scale, and what to check on your own site this week before a plaintiff’s attorney checks it for you.

A class action complaint gets served to whatever address sits on your LLC’s public filing, and if that’s your home address, plaintiffs’ attorneys now have it too. See how Northwest keeps your address off public lawsuit filings →

Nike and Lululemon Sued Over Phantom Discount Pricing

Last week a Los Angeles Superior Court complaint named Lululemon, filed by a California shopper named Annette Cody. Her claim: Lululemon lists products with fictitious regular prices and “corresponding phantom discounts.” She points to a pair of Wunder Train high-rise tights bought in April, listed at $59 next to a struck-through $98, an apparent $39 markdown that her attorneys say never reflected a real selling price. Court filings say the tights hadn’t actually sold for $98 since October 2025.

That suit landed just days after a nearly identical class action hit Nike in the Southern District of California. Filed July 21 by plaintiff Corinne Pearson, the Nike suit alleges the company’s site and app show fabricated strikethrough reference prices next to “sale” prices and a calculated percentage off, purely to make shoppers think they’re getting a deal that isn’t real. One example from the filing: a pair of black Nike Killshot 2 shoes listed at $54.97 next to a crossed-out $100, while the same shoes elsewhere on Nike’s own site carried a $90 reference price marketed as “38% off.” Air Max 2017 sneakers, per the complaint, carried a $190 reference price despite being continuously marked down for at least six months straight.

Both suits lean on California’s Business and Professions Code Section 17501, which requires that any advertised “former price” reflect the actual prevailing market price within the prior 90 days, unless the ad discloses when that higher price last applied. Add claims under the state’s Unfair Competition Law and the Consumer Legal Remedies Act, and Nike is facing potential liability to every California customer who bought a discounted item off a reference price going back to July 2022.

Neither company is commenting on active litigation. But attorney Rob Freund, who has tracked false-discount suits since 2013, told Modern Retail that filings “were about twice as many in 2025 compared to 2024,” and he doesn’t have a clean explanation for the acceleration. He also flagged gardening brand Vego Garden as one of the most recent smaller retailers hit with the same claim.

Federally, the same conduct runs into the FTC’s Guides Against Deceptive Pricing (16 C.F.R. Part 233), which the agency has enforced since long before this wave of private lawsuits. A reference price only qualifies as a “former price” if the item was actually offered at that price for a substantial, recent period, and MSRP comparisons only hold up if the MSRP reflects real prices being charged in the market, not a number set purely to inflate the apparent discount, according to a breakdown from ecommerce law firm Revision Legal.

That last point, the MSRP comparison rule, is the one that should get every high-ticket store owner’s attention. MSRP-versus-your-price isn’t an edge case for this business model. It’s the model.

Why Phantom Discount Lawsuits Doubled From 2024 to 2025

Phantom discount claims aren’t new. Section 17501 has been on the books in California for decades, and retailers have been settling these cases quietly for almost as long. Amazon paid $2 million in 2021 to resolve a district attorney coalition’s scanner-pricing and false-advertising claims. Lamps Plus settled for $4.1 million in 2024 over the same type of reference-pricing complaint, according to Bloomberg Law. TJ Maxx, Marshalls, Macy’s, Bloomingdale’s, J.Crew, and Kohl’s have all faced the same allegation at some point in the last decade.

What’s changed is the frequency, not the legal theory. Freund’s twice-as-many-in-2025 estimate lines up with a broader pattern: Zynga and Shutterfly both got hit with fake-discount suits in the past few years, and Georgetown marketing professor Anita Rao told Modern Retail that rising consumer price sensitivity is likely feeding the surge. Shoppers are seeing higher prices everywhere right now, she noted, so everyone is paying closer attention to what they’re actually being charged.

There’s also more visibility into pricing history than there used to be. Amazon’s built-in price-history feature lets shoppers check whether a “deal” is real before they buy, and third-party browser extensions do the same across most major retailers. Rao is careful to note these tools alone probably don’t move most shoppers, but they’ve made it dramatically easier for a plaintiff’s attorney to build a complaint. Pull twelve months of price snapshots on a SKU, and a pattern of permanent “40% off” banners writes the lawsuit for you.

What the Phantom Discount Crackdown Means for Your MSRP Pricing

Here’s where this stops being someone else’s problem. Nike and Lululemon set their own reference prices from scratch, which is exactly why they’re exposed. Nobody outside the company decided a Killshot 2 was “worth” $100.

High-ticket dropshipping stores work differently. Your MSRP usually comes straight from the manufacturer’s price sheet, the same number every authorized dealer in the category displays, assuming you’ve actually built real supplier relationships instead of scraping a marketplace listing. That’s a real, external, defensible reference price, and it’s a meaningfully stronger position than what Nike is accused of doing.

But “meaningfully stronger” isn’t “immune.” Two things break that protection fast. First, a stale MSRP: a number pulled from a supplier price sheet that changed eight months ago while your product page never got the update. Second, and this is the one I see constantly when auditing client stores, stacking a second discount on top of the MSRP markdown. A permanent “site-wide sale, ends tonight” banner that’s been live since spring. A countdown timer that resets every time it hits zero. That second layer is where a legitimate MSRP comparison turns into exactly the fact pattern Lululemon is being sued over.

There’s a second exposure most store owners aren’t even thinking about: Google Merchant Center treats the identical behavior as a misrepresentation violation, and it doesn’t wait for a plaintiff’s attorney to notice.

If the price in your feed doesn’t match the price on your live product page, or your “sale” price is functionally your everyday price, Google can suspend the whole account with no warning. For a store where Shopping ads are the primary channel, and on most high-ticket stores I work with, they are, that suspension does more damage in one afternoon than a class action does in a year. It’s exactly the kind of feed hygiene a good Shopping ads agency should be catching before Google does.

Run the numbers on a typical catalog. A store carrying 250 SKUs at a $2,400 average order value, running a sitewide “15% off MSRP” banner that’s been live continuously since January, is sitting on the exact evidence a plaintiff’s firm needs: a screenshot, an archive snapshot, and a pattern. You don’t need thousands of California customers to trigger real exposure. Section 17501 claims come with statutory penalties up to $2,500 per violation, and in a class action, “per violation” tends to mean per transaction.

Step back further and the same lesson applies to how your business is structured in the first place. A phantom discount suit names the business, not you personally, only if you’ve actually got a real LLC in place and kept up the formalities, including something as basic as having a real registered agent on file.

I’ve written about the difference between an LLC and a sole proprietorship for ecommerce in a separate guide. For high-ticket stores specifically, I break down the best business structure for a high-ticket operation there too, and a pricing lawsuit is as good a reason as any to get that settled before you need it.

None of this means pulling MSRP off your product pages. It means documenting it. Keep dated records of your supplier’s price sheets through a real bookkeeping system like Finaloop instead of a spreadsheet nobody’s updated since Q1.

Make sure your storefront on Shopify actually reflects the discount rules you think it does. If you’re running a theme like Superstore, check its built-in sale-badge and countdown settings specifically, since those default configurations are exactly where stale discounts hide.

If you’re realizing you don’t actually know what your pricing displays are doing across 200-plus SKUs, that’s a normal place to land, and it’s exactly the kind of cleanup my team handles inside the turnkey done-for-you build when we take over a store’s pricing and feed setup from scratch. I cover pricing and compliance changes like this one in more depth for Patreon members most weeks, since this is the kind of thing that shifts fast and quietly.

New to high-ticket dropshipping and not sure where your own pricing and compliance gaps might be? Grab the free beginner’s guide →

How to Audit Your Strikethrough Pricing Before You Get Sued

Nobody needs to panic and strip every “was” price off their site tonight. You need about forty-five minutes and a checklist.

Pull ninety days of price history on your ten highest-traffic SKUs. If you’re using Finaloop or another bookkeeping tool tied to your order data, this is a five-minute export. If you’re not, that’s the first gap to close.
Confirm your MSRP source is current. Email your top three suppliers (my supplier directory has contacts if you need them) and ask for their latest published price sheet, then compare it against what’s actually live on your product pages.
Turn off, or make honest, any countdown timer or “sale ends tonight” banner that’s been running longer than the sale it’s advertising. If the sale never actually ends, it isn’t a sale.
Screenshot your Google Merchant Center feed next to your live site prices across five random categories. A mismatch here risks a Shopping ads suspension on top of any legal exposure.
Get your pricing and returns policy pages reviewed. A tool like Termly can generate a compliant policy that discloses your discount terms clearly, which is exactly the kind of disclosure California law lets you substitute for the 90-day rule.
If the audit turns up more than you want to fix alone, book a discovery call this week and walk through your specific catalog with me directly.

Frequently Asked Questions

Is it illegal to show MSRP next to my selling price?
No, not by itself. It becomes a legal problem when the higher price isn’t a real, current price anyone is actually charging, or when you inflate it yourself to manufacture a bigger-looking discount.

What is California’s 90-day rule?
Business and Professions Code Section 17501 says an advertised “former price” must reflect the prevailing market price within roughly the prior 90 days, unless your ad discloses when that higher price last applied.

Does this only apply if I sell to California customers?
No. California is the strictest and most litigated, but New York, Illinois, Washington, and Texas all have similar deceptive-pricing statutes, and a uniform pricing strategy that violates one state’s rule usually violates several others too.

Can Google actually suspend my Shopping account over this?
Yes. Google treats misrepresentation as an egregious violation with little to no warning period, which is worse in the short term than a lawsuit for a store where Shopping ads drive most of the traffic.

Do I need to keep records of my pricing history?
Yes. Dated records of your supplier’s price sheets and your own sale calendar are your entire defense if a complaint ever lands, and a proper bookkeeping setup makes that automatic instead of a scramble.

Should I stop running “was/now” pricing altogether?
No. MSRP-based pricing is a legitimate, common practice for authorized dealers. The fix is making sure the reference price is real and current, not abandoning the format.

What if I don’t have an LLC yet?
Get one before you need it. I break down Bizee vs LegalZoom in a separate comparison, and I recommend starting with Bizee for most new filers.

Want 1-on-1 coaching to launch your high-ticket store the right way, pricing compliance included? Get the coaching details →

Pricing lawsuits move slow until they don’t, and the stores that get hit hardest are always the ones that never looked. Pull your price history, check your MSRP, and fix the countdown timer that’s been lying since March. It’s a Friday afternoon of work now instead of a deposition later.

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Trevor Fenner

Trevor Fenner is an ecommerce entrepreneur and the founder of Ecommerce Paradise, a platform focused on helping entrepreneurs build and scale profitable high-ticket ecommerce and dropshipping businesses. With over a decade of hands-on experience, Trevor specializes in high-ticket dropshipping strategy, niche and product selection, supplier recruiting and onboarding, Google & Bing Shopping ads, ecommerce SEO, and systems-driven automation and scaling. Through Ecommerce Paradise, he provides free education via in-depth guides like How to Start High-Ticket Dropshipping, advanced training through the High-Ticket Dropshipping Masterclass, and fully done-for-you turnkey ecommerce services for entrepreneurs who want a faster, more hands-off path to growth. Trevor is known for emphasizing sustainable, real-world ecommerce models over hype-driven tactics, helping store owners build scalable, sellable, and location-independent brands.