Promotional pricing under the microscope: What retailers need to know about state 'former price' regulations and the class-action risks they create

Key takeaways

• At least 17 states regulate how retailers reference a “regular” or “former” price in promotional advertising. The regulations range from brightline time-period requirements to vague “reasonably substantial period” standards, creating a patchwork of compliance obligations for national retailers.
• Direct-to-consumer retailers with frequent promotion models and high e-commerce volumes face the highest class-action exposure.
• The “28/90 Rule,” requiring retailers to offer the regular price for at least 28 of the 90 days before a promotion, may provide the most practical compliance benchmark across the state regulatory landscape.
• Several states allow compliance through simple advertising disclosures identifying when the retailer last charged the regular price, but disclosure alone will not satisfy other states that require a genuine regular-price offering period.
• Separate from former-price rules, multiple states impose minimum-quantity requirements for range-based promotions like “up to X% off,” with the strictest threshold requiring at least 15% of the assortment at the deepest advertised discount.

Retailers that run frequent promotions or seasonal sale events should be aware that at least 17 states regulate how retailers reference a “regular” or “former” price in discount advertising. These laws are not new, but consumer class actions targeting direct-to-consumer retailers have brought them back into sharp focus. This update provides a practical overview of the regulatory landscape, the exposure risks that make certain companies attractive targets for consumer class actions, and practical next steps to address compliance and mitigate risk.

The core issue: What makes a “regular price” regular?

At the heart of these pricing regulations is a simple question: Was the “regular” or “former” price advertised alongside a promotional discount a genuine price at which the retailer offered or sold the product? By way of example, if a product launches at a $50 “regular price” but spends most of its life cycle at $35 on promotion, a consumer may argue that $50 was never a real price at all—rather, they will argue that it was a fictitious reference point designed to make the discount look more attractive. States vary widely in how they define what counts as a bona fide former price, but the approaches generally fall into two categories: brightline states with specific time-period requirements and ambiguous states with “reasonably substantial period of time” requirements.

Brightline states: Specific time-period requirements

Several states set specific time periods during which a retailer must have maintained a former price for it to be lawful. These brightline rules offer relative certainty—a former price either meets the benchmark, or it does not. Alaska, California, Oregon, and Ohio also allow disclosure-based alternatives for former prices that extend beyond the statutory lookback period. The rules in these states are as follows:

Relief in these states varies greatly. Some states allow an award of treble or multiple damages in some circumstances (Alaska, Massachusetts (with scienter), New Jersey, and Wisconsin), punitive damages (Alaska, California, Connecticut, and Oregon), or substantial statutory minimums (Alaska, California, Oregon, and Utah). By contrast, Ohio limits class-action recovery to actual damages, while allowing treble damages or $200, whichever is greater, only in individual actions.

“Reasonably substantial” states: The ambiguous middle ground

The second category of states does not require a specific time period. Instead, these states require that the retailer have offered the former price for a “reasonably substantial period of time” in the recent regular course of business, openly, actively, and in good faith. Without a concrete benchmark, this standard leaves retailers exposed to uncertainty that consumers can exploit in litigation. States in this category include Illinois, Louisiana, Montana, North Dakota, Virginia, and Vermont, along with New York City.

There is no general consensus on precisely what period of time satisfies the standard. In practice, the 28/90 Rule may serve as a useful compliance benchmark given the number of states that have specifically adopted that rule. And at least one court in the Northern District of Illinois has suggested that returning to a nondiscounted price for 30 days each quarter may suffice, essentially aligning with the 28/90 Rule.

Notably, some states have bright-line lookback periods for product sales. For example, Louisiana and North Dakota both require “substantial sales during the three months preceding the comparison.” Relying on requirements tied to sales carries two risks: (1) retailers still face uncertainty under the ambiguous “substantial sales” requirement, and (2) there is no guarantee that a product will generate sales, let alone “substantial sales,” during the relevant period, creating potential exposure if the retailer does not meet the requirement.

Damage exposure in this second category also varies greatly. Many states allow treble damages (Louisiana, Montana, New York, North Dakota, Virginia, and Vermont) or punitive or exemplary damages (Illinois and Vermont). However, Louisiana and Montana materially limit aggregate exposure by prohibiting representative or class actions.

Range-based promotion requirements: Discount quantity rules

In addition to the former-price rules discussed above, retailers should also be aware that several states impose specific requirements on “up to X% off” and similar range-based promotional advertising. These rules govern the percentage of products that a retailer must actually offer at the deepest advertised discount, how prominently the retailer must display the minimum and maximum savings, and what disclosures the retailer must include with the advertisement.

The strictest standard comes from New York City, which requires a retailer make at least 15% of items in a range-of-savings advertisement available at the maximum advertised discount. Connecticut and Massachusetts set the threshold at 10%. North Dakota sets its floor at 5%.

The practical takeaway is straightforward. If a retailer’s promotional advertising claims “up to 40% off,” it must ensure that a meaningful portion of the advertised assortment is actually offered at that 40% discount, not just one or two items. A retailer that maintains at least 15% of its assortment at the deepest advertised discount will satisfy the most stringent requirement and comfortably clear the thresholds in every other state.

Exposure risk: What makes certain retailers targets?

Not every retailer faces equal risk of becoming the target of a consumer class action over promotional pricing. Certain pricing practices tend to attract heightened scrutiny from consumer lawyers or generally increase exposure risk. Such practices include:

• Permanent promotion models: The most significant risk factor is a pricing model in which products spend the vast majority of their life cycle on some form of promotion, with regular price windows that are brief or infrequent.
• E-commerce retailers: Direct-to-consumer retailers with significant e-commerce revenue across multiple states face exposure in every jurisdiction where they make sales. Online retailers cannot rely on geographic concentration in favorable states; a national e-commerce presence means 50-state regulatory exposure.
• Strikethrough pricing: Retailers that prominently display a crossed-out “regular” or “former” price alongside a promotional price are making an explicit price comparison, exactly the kind of claim these statutes regulate.
• Lack of disclosure language: Retailers that do not include any time-period disclosures in their advertisements, such as when they last charged the regular price, forgo a compliance tool that several states specifically recognize as a safe harbor or cure. Note that this could be a double-edged sword. For instance, if a retailer charged a product’s regular price six months prior to the promotion, a disclosure identifying that former price date might satisfy California or Oregon, but it could also highlight that the former price does not comply with one of the states following the 28/90 Rule.

Practical steps to mitigate risk

In light of the regulatory patchwork described above, retailers that rely heavily on promotional pricing should proactively reassess their practices:

• Evaluate the pricing life cycle: If products spend substantially all their time on promotion, with only brief or intermittent time at the identified former price, that pricing model may not satisfy the former-price requirements in many states. Building periodic returns to regular price into the product life cycle (i.e., offering products at the regular price for at least 28 of the 90 days preceding a promotion) will comply with the most accepted benchmark.
• Consider adding time-period disclosures to promotional advertising: In disclosure-friendly states like California and Oregon, adding language such as “former price offered on [date]” to advertisements can provide a low-effort compliance measure. But be cautious; if the disclosure reveals the regular price was offered only briefly or long ago, it could alert consumer lawyers to a class-action theory in states requiring the 28/90 Rule or a “reasonably substantial” offering period.
• Audit range-based advertising: Retailers should ensure that a sufficient percentage of the assortment is offered at the deepest advertised discount (at least 15%) to satisfy the strictest requirement.

The bottom line

The state regulatory landscape for promotional pricing is fragmented, and consumer class-action lawyers are paying attention. A careful, recurring review of the pricing life cycle, advertising disclosures, and promotional structures, with advice from experienced retail and consumer protection counsel, remains the most effective way to mitigate exposure while preserving the flexibility of a retailer’s promotional strategy.