You’ve long suspected it.
I certainly have.
As you shop one of those super sales, back in your mind you’re wondering if late at night the stores increase base prices so you think you are getting a big discount.
You aren’t being paranoid. There’s a phase for your suspicions. It’s called “price anchoring.”
It’s “the retail-world term for setting a high list price to anchor in a perception of value for a product,” writes Brad Tuttle of Time Magazine. “Because these anchor prices are often so high that almost no customers actually pay them, and because they exist mainly so that the inevitable sales and markdowns appear larger and more tempting, there’s another term frequently applied to the strategy: fake pricing.”
J.C. Penney was accused by a former employee of faking sale prices, reports Kim Bhasin of Huffington Post.
In an interview with “The Today Show,” Bob Blatchford, who worked at Penney store in Florida, said the store intentionally marked up discounted items and then advertised them at lower prices.
“I saw a lot of pricing teams going through the store, raising the prices, mostly doubling -- towels and clothing,” Blatchford told NBC’s Jeff Rossen. “Then they would go on sale, and they wouldn’t always go on sale for 50 percent off. Not only was it a fake sale, but they were actually paying more than they would have been previously.”
After his appearance on the show, Blatchford was fired. And when he applied for unemployment, the company fought the claim. J.C. Penney says Blatchford has an “unbalanced vendetta” against the company, Bhasin reports.
Nonetheless, the case reveals a practice that needs to be brought to the light, which is that “discounts, sale prices and big promotions are largely a game of smoke and mirrors,” writes Bhasin.
So, the lesson for you is not to become enamored by a sale. Comparison shop and check prices before a big sale.
Color of Money Question of the Week
Have you ever caught a retailer promoting a fake sale? Send your comments to email@example.com. Put “The Price Is Wrong” in the subject line and include your full name, city and state.
Live Chat Today
Join me today at noon ET for a Color of Money Live online discussion.
My guest will be Crystal Paine, author of “Say Goodbye to Survival Mode,” which was the Color of Money Book Club selection for this month.
If you can’t join the chat live, send your questions in early. If you miss the chat read the archive.
Ever wonder, “Where is all my money going?”
Katherine Muniz of The Motley Fool recently compiled a list of 20 ways Americans are blowing their money. Here are a few of the major money wasters:
-- Credit card interest. The average credit card debt per U.S. household is $15,270. In total, Americans owe $856.9 billion in credit card debt, reports Muniz.
“If you carry an unpaid balance, it’s worth considering whether you’re a consumer who needs assistance, or if you’re simply spending beyond your means,” Muniz adds.
-- Electricity. Crooner Teddy Pendergrass was right: Turn off the lights. Americans throw away $443 billion on wasted energy.
-- Lottery tickets. You are more likely to get struck by lightning than win the lottery. But people keep playing. Americans spent $66.5 billion on lottery tickets in 2011, an increase of nearly 10 percent from the year before, reports Muniz.
Money in the Bank
If you’re an Amazon customer, check your e-mail.
The online retailer has been sending out notices to customers about their share of a $166 million legal ebook settlement with publishers. The lawsuit, brought by the U.S. Department of Justice, accused five book publishers — Hachette, HarperCollins, Simon & Schuster, Penguin and Macmillan -- of conspiring with Apple to increase prices of ebooks, reports Alexis Kleinman of the Huffington Post.
A Friend in Need
A reader recently wrote to Washington Post advice columnist Carolyn Hax asking for advice on how to deal with friends who weren’t there for her when she was ill.
The single woman wrote, “Several of my friends knew I was under the weather and I’m very sad to say that not one called to ask if I was feeling better or if they could do anything. I really could have used some food and, yes, a bit of friendship.”
Here’s Hax’s response.
The reader’s letter prompted last week’s Color of Money Question: “Do you offer to help someone financially if they don’t ask?”
“I have helped a friend with cash,” wrote Jackie Greene of Newark, N.J. “The friend didn’t ask, but he had lost his job, was dealing with a major illness, and needed the assistance. I didn’t go into debt to help, but I sent what I could for a few months. For me it amounted to not going out once a month, but to him it was food for the month. I would do it again in a heartbeat, and I would expect my true friends to assist me.”
Anginelle Chinn of District Heights, Md., wrote: “I offered money to a friend with children who was going through a rough time due to child support issues and problems at her job. She mentioned that she had no food in her house, so I gave her cash. Later, I found out she had spent the money on gas for her vehicle and her cell phone bill. Someone else had already said he would buy her food. She didn’t tell me that when I offered the money. Had I known I was paying her cell phone bill, I probably wouldn’t have offered the money.”
Said Eleanor J. Eaton of Crofton, Md.: “I have offered financial help in the past to a longtime friend who always seems to live on the edge, but have come to realize that by doing so I am just enabling her.”
Tia Lewis contributed to this report.
Readers may write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C., 20071, or firstname.lastname@example.org. Personal responses may not be possible, and comments or questions may be used in a future column, with the writer’s name, unless otherwise requested. To read previous Color of Money columns, go to www.postbusiness.com.