HP Agrees to $4 Million Settlement for Deceptive Advertising

Key Takeaways

• HP agrees to a $4 million settlement to end a lawsuit that accuses it of deceptive advertising tactics.
• The settlement covers all administrative costs, lawsuit expenses, and compensation to aggrieved consumers.
• A similar case has also been filed against Amazon for mis-advertising its Fire TV.

HP has agreed to enter into a $4 million settlement to rest the allegations that it had resorted to deceptive pricing on its website to defraud customers.

The lawsuit alleged that HP has misused strike-through pricing by showing a higher crossed price in the name of special deals or discount prices. However, these striked-out prices were nowhere close to the original or recent price of the products.

The Lawsuit's Backstory

The lawsuit was filed by Rodney Carvalho, who purchased a desktop PC from the company's website for $899.99. The PC was advertised as $100 off as against the original price of $999.99.

However, a year later, when this lawsuit was filed, Rodney found out that HP never actually sold that particular model for $999.99. Later, Mark Maher also joined the lawsuit, and together they filed a class-action lawsuit against HP.

The $4 million settlement amount includes compensation for affected customers, attorney fees, administrative costs, and service awards to lead plaintiffs. The compensation will only be provided to eligible customers, i.e., those who purchased HP laptops, desktops, keyboards, or mice between 5 June 2021 and 28 October 2024. The exact compensation per plaintiff can range from $10 to hundreds of dollars, depending upon the product that was purchased.

A very interesting angle to the settlement is that HP does not require admitting to any wrongdoing. The settlement appears to us as hush money to sweep the matter under the carpet. This means that there will be no legal repercussions for the misleading selling tactics followed by the company.

Had the matter gone to court, there might have been a higher penalty or restrictions on doing so again in the future. However, with this settlement, there's no guarantee that HP won't do it again.

Although the final approval is still due for hearing on August 21, 2025, it's more or less a formality now. Aggrieved members are also required to submit the claims by June 9 to be eligible for the compensation.

Another rather uncomforting condition of the settlement is that the plaintiff and their attorneys are not allowed to speak to the media or issue press releases unless required by law. The question we're asking is: If there's nothing to hide or admit, why would HP place such a condition?

Not Just a One-off Case

This HP case is just one of many such instances and dangers of online marketing and shopping. Sellers often resort to surge pricing to lure in customers, especially during the holiday seasons.

Recently, Dell was also fined AU$10 million for overstating discounts on bundled monitors. Allegedly, the company was charging customers more for bundle purchases as compared to purchasing those items separately. Amazon is also facing a lawsuit for fake limited-time discount offers on its Fire TV products.

Such deceptive pricing also affects fair competition in any industry. Imagine two companies selling laptops for $500 each. However, the first company advertises its laptops as $800 and slashes the price to offer them at $500. This gives the company an edge because customers think that their laptops are worth $800 (and hence are of superior quality), which was never really the case.

Although this case is now a lost cause for the consumers at large, we hope that some of the other lawsuits bring out a definitive law against such advertising malpractices.

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