Fashion retailer Zara got hit with a lawsuit for allegedly cheating American shoppers out of billions of dollars. The retailer, known for its trendy but reasonably priced clothing for women and men, was accused of unlawful pricing. Attorney Mark Geragos represents the plaintiffs. He accused Zara of "bait and switch and cover-up pricing." He said many products are priced in euros and when converted at the register, consumers are overcharged. "We estimate between $12 and $15 per item, and if you extrapolate that out, it could be upwards of $1 billion or more … ," he said. Zara USA denied the allegations.
Total Retail's Take: For Spain-based Inditex, parent company of Zara, this lawsuit represents a stumble in its continued expansion in the U.S. Earlier this summer, Inditex reported a 15 percent increase in second quarter sales, as it was increasingly taking market share away from other mall-based retailers such as Gap, J.Crew, Forever 21, and H&M. However, that good will built up with American consumers will go away real fast if the retailer is proven to have knowingly overcharged customers. Let's see how the lawsuit plays out.