Strike-through pricing is one of retail’s most recognizable tactics – showing a higher, crossed-out “original” price next to a lower current price to signal savings. It’s effective at capturing attention and driving purchases, but it’s also tightly regulated.
Because if that “former” price isn’t legitimate, retailers could face legal action. Understanding the former price rule and how it applies is essential for any brand and retailer using promotional pricing. And this applies for all channels, whether you’re selling goods online, or in-store.
Let’s walk you through it.
What is a former price or strike-through pricing?
Strike-through pricing, also known as reference pricing or former price advertising, is when a retailer displays a previous higher price alongside a lower promotional price:
Example:
$129.00 → $79.99
The purpose is to show a discount or savings. However, the former price must be real, meaning it cannot fabricated or inflated just to create the illusion of a deal.
U.S. regulations on strike-through pricing
The Federal Trade Commission (FTC) regulates deceptive advertising practices, including strike-through pricing. According to the FTC’s Guides Against Deceptive Pricing (16 CFR Part 233):
“If the former price is the actual, bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time, it provides a legitimate basis for the advertising of a price comparison.”
This means the original price must have been genuinely offered to the public, not just used as a pricing anchor to make the discount appear larger.
California’s former price rule: stricter enforcement
California enforces its own set of pricing laws under Business and Professions Code §17501, which are more specific – and more aggressive in enforcement.
Here are the key provisions of California’s former price rule:
Prevailing market price requirement
The previous price must accurately reflect the market price at which the product was recently sold.90-Day rule
If the product was not sold at the former price in the last 90 days, retailers must clearly disclose the last date it was offered at that price.Truthful representations
Retailers cannot inflate or invent former prices to make a discount appear more substantial than it really is. Price history must be well-documented.
The state of California actively enforces this rule, which highlights the necessity for retailers to ensure lawful pricing practices.
Why retailers should care
Failing to follow the former price rule can have serious consequences. For example, in Spann v. J.C. Penney (2015), the retailer was accused of advertising false “original” prices. Shoppers claimed the prices were never actually offered – and the retailer ultimately settled for $50 million. That’s a steep price to pay.
Beyond lawsuits, misleading pricing can hurt brand trust, lead to negative press, and damage long-term customer relationships.
Consumer protection laws are tightening and your former prices need to be accurate. The Omnibus Pricing app automates compliance, so you don’t have to worry.
How to stay compliant with strike-through pricing rules
Use this checklist to make sure your pricing practices remain compliant:
- Keep detailed records of former prices, including dates and where the prices were offered (in short, keep a legitimate price history)
- Verify that “original” prices were actually offered to the public in the last 90 days
- Don’t use list prices that were never real or were artificially inflated (this includes MSRPs that have never been a market price)
- Regularly audit your website, product pages, and promotional campaigns to prevent outdated or misleading price comparisons
- Educate your team on these legal requirements and internal compliance policies
How pricing software can help
Manually tracking pricing history and ensuring compliance can be time-consuming and error-prone. That’s where a pricing automation platform like Pricen makes a difference.
With Pricen, retailers can:
- Track real-time and historical prices
- Avoid outdated or inaccurate reference pricing
- Apply segmented pricing rules to specific states or regions
- Ensure discount messaging aligns with actual sale history
For retailers on Shopify or BigCommerce, Pricen offers a ready-to-download app “Omnibus Pricing” that integrates directly with your storefront. It automatically applies compliant pricing logic – so you can create promotions confidently, without compromising legal integrity. Find it on the Shopify App Store: https://apps.shopify.com/omnibus-price.
Conclusion
Strike-through pricing remains a powerful tactic in retail, but it comes with regulatory responsibilities that can’t be overlooked. Complying with the former price rule is essential for building trust with consumers and avoiding costly legal exposure.
The good news? With the right systems in place, compliance doesn’t have to be complicated. By combining clear internal processes with pricing tools that track and document historical prices, retailers can promote with confidence, knowing their discounts are not only compelling but fully compliant.
Disclaimer: This article is intended for informational purposes only and does not constitute legal advice. While we’ve made every effort to provide accurate and up-to-date information about the former price rule in the U.S., we do not guarantee the accuracy, completeness, or legal validity of the content. Laws can vary by jurisdiction and evolve over time. Retailers should consult with qualified legal counsel to ensure their pricing practices comply with all applicable federal, state, and local regulations.
