Strike-Through Pricing on Retail Websites: When a “Sale” Price Becomes a False Advertising Risk

By: Daniel J. Gershman and Elysse M. Anderson

“Strike-Through Pricing” exists where an advertisement or label displays a crossed-out purportedly regular price (the “Strike-Through Price”) near a purportedly lower sale price (the “Discount Price”). It is one of the most effective conversion tools in e-commerce. Strike-Through Pricing communicates an immediate bargain and creates urgency. However, when the reference price displayed to consumers is inflated, outdated, or unsupported, what looks like a compelling promotion can become an invitation to regulatory enforcement or class action litigation.

This post summarizes what online retailers selling into New York and nationally need to know to use Strike-Through Pricing lawfully and provides a practical compliance checklist.

What Strike-Through Pricing Communicates to Consumers

A Strike-Through Price is often indicated as $129.99 $99.99 and may also be referred to a “reference price,” “comparison price,” or even the “former price.” It represents a markdown from a price the product has historically been sold within a relatively recent time period.

That representation triggers legal obligations. Federal and state advertising laws require that the Strike-Through Price be real, recent, and supportable, not an artificial figure set solely to manufacture the appearance of a discount.

Why the Reference Price Must Be Bona Fide

The FTC’s Guides Against Deceptive Pricing (16 C.F.R. Part 233) provide the federal baseline. Key principles include:

• Former price claims. A Strike-Through Price is legitimate only if the product was openly offered at that price, in good faith, for a reasonably substantial period of time in the recent, regular course of business. An inflated Strike-Through Price that no consumer actually paid, or that was listed only briefly to set up an advertised discount, is considered fictitious.
• Competitor or market price claims. If the Strike-Through Price purports to reflect what others charge, it must correspond to the prevailing market price, the price at which substantial sales are actually being made in the relevant trade area, not an outlier charged by a handful of isolated retailers.
• List or MSRP claims. A manufacturer’s suggested retail price may be used as the Strike-Through Price only if it reasonably reflects the price at which the article is generally sold by principal retail outlets. If most retailers have moved below MSRP, using it as the Strike-Through Price creates a misleading impression of savings.
• Advance sale and limited time offers. A retailer should not advertise an “advance sale” price unless it genuinely intends to increase the price afterward and should not describe an offer as “limited” when it is, in practice, the permanent price.

Ultimately, if a product was never sold at the Strike-Through Price or has not been sold at that price in the reasonably recent past, the discount is illusory, and regulators and plaintiffs will treat it as deceptive.

“Prevailing Market Price” and Multi-State Complexity

For website retailers selling nationally, the “trade area” concept creates complexity. In a brick-and-mortar context, the trade area might be a city or region. Online, a single product page reaches consumers in all 50 states, each with its own consumer protection statute and, in some cases, specific Strike-Through Pricing rules.

New York. General Business Law §§ 349 and 350 prohibit deceptive acts and false advertising broadly. New York courts and the Attorney General have consistently taken the position that Strike-Through Pricing is misleading if the basis for the higher price is not disclosed and the Strike-Through Price does not reflect the seller’s actual, bona fide recent pricing. The legal standard focuses on the “net impression” the advertisement creates in a reasonable consumer’s mind.

California. Business and Professions Code § 17501 provides a specific bright-line rule: the Strike-Through Price must be the prevailing market price within three months immediately preceding the advertised price, or the advertisement must disclose the applicable time period. California has become a particularly active jurisdiction for Strike-Through Pricing class actions.

Other states. Many states have “little FTC Acts” that incorporate the FTC’s deceptive-pricing principles by reference or through parallel enforcement standards. A retailer operating a single national website must comply with the strictest applicable standard, meaning that California’s three-month lookback and New York’s net-impression test both apply to the same product page.

Clear Disclosure: On the Product Page, Not Just at Checkout

The FTC’s .com Disclosures guidance makes clear that material pricing disclosures must be:

• Placed as close as possible to the triggering claim (i.e., on the same product display page where Strike-Through Price appears—not buried at checkout or behind a hyperlink);
• Prominent and unavoidable across all devices and screen sizes;
• Written in understandable language. Vague hyperlink labels such as “Disclaimer” or “Details” are inadequate; and
• Repeated where necessary if the consumer encounters the pricing claim on multiple pages during the purchase flow.

The critical point for retailers: a disclaimer cannot rescue an inflated Strike-Through Price. If the overall net impression of a product listing is that the consumer is receiving a discount from a genuine former price, a footnote or tooltip stating “prices may vary” will not cure the deception. Disclosures explain the basis for a truthful claim; they do not transform a false claim into a true one.

Current Enforcement and Litigation Landscape

Strike-Through Pricing remains a persistent class action and regulatory flashpoint. Recent enforcement and litigation activity has focused on whether online “regular” prices were actually charged often enough, and recently enough, to support Discount Prices. Retailers across categories, from apparel to consumer electronics, have faced claims that their Strike-Through Prices were fictitious because products were sold at the Discount Price the vast majority of the time.

Courts and regulators are likely to view a Strike-Through Price as misleading absent robust support that such price reflects a genuine, recent market price. The practical takeaway: documentation and substantiation are not optional, they are the primary defense.

Practical Compliance Checklist for Website Retailers

Use the following checklist to evaluate and maintain lawful Strike-Through Pricing practices:

• Substantiate the Strike-Through Price. Confirm that the Strike-Through Price was the actual, bona fide price at which the product was offered to the public, in good faith, for a reasonably substantial period in the recent, regular course of business.
• Apply a three-month lookback (at minimum). Ensure the Strike-Through Price was the prevailing market price within the three months immediately preceding the current advertised price. If using a different period, disclose it.
• Distinguish the basis of comparison. Clearly state on the product page whether the Strike-Through Price is the retailer’s own former price, a competitor’s price, or a manufacturer’s suggested retail price. Do not leave the consumer guessing.
• Verify MSRP against actual market pricing. Before using a manufacturer’s list price as the comparison, confirm it reflects the price at which principal retail outlets in your market are actually selling the product, not an unsubstantiated number most retailers have discounted below.
• Place disclosures on the product page, not at checkout. Any material qualification of the comparison (e.g., “Compare at” price reflects MSRP) must appear adjacent to the Strike-Through Price, not behind a hyperlink or at the point of sale.
• Design for all devices. Confirm that disclosures are prominent and visible on mobile, tablet, and desktop and not truncated, hidden behind expandable sections, or rendered in an unreadably small font.
• Limit promotion duration and return to the higher price. If the Strike-Through Price becomes the permanent price, the Strike-Through Pricing is no longer truthful. Set defined promotional windows and genuinely revert pricing afterward.
• Regularly audit reference prices for staleness. Implement a cadence (monthly or quarterly) to review whether displayed Strike-Through Prices still reflect recent, actual pricing. Remove or update comparisons when market conditions change.
• Maintain detailed pricing records. Keep audit trails documenting the dates, durations, and transaction volumes at each price point. The substantiation will be required if a regulator or plaintiff demands it.
• Train pricing, marketing, and e-commerce personnel. Ensure that everyone involved in setting or displaying prices understands that Strike-Through Prices are advertising claims subject to federal and state scrutiny, not merely merchandising tools.

How FRB Can Help

Falcon Rappaport & Berkman LLP advises retailers, DTC brands, and e-commerce platforms on advertising compliance, promotional pricing, and consumer protection matters in New York and nationally. If your business uses comparison or strike-through pricing and you need guidance on substantiation, disclosure obligations, or multi-state compliance, our team is available to help.

Contact us at frblaw.com to discuss your pricing practices.

DISCLAIMER: This summary is not legal advice and does not create any attorney-client relationship. This summary does not provide a definitive legal opinion for any factual situation. Before the firm can provide legal advice or opinion to any person or entity, the specific facts at issue must be reviewed by the firm. Before an attorney-client relationship is formed, the firm must have a signed engagement letter with a client setting forth the Firm’s scope and terms of representation. The information contained herein is based upon the law at the time of publication.