Boohoo ‘close to settlement’ in multimillion-dollar US class action lawsuit

Manchester online fashion retailer, Boohoo, says it is close to a settlement agreement over allegations in the US that it deceived customers with fraudulent pricing.

The retailer is embroiled in a class action lawsuit launched last year that claims Boohoo used fake promotions to mislead shoppers.

Originally, the claim was estimated at $100m (£73m), but Boohoo, in its latest accounts published in September, revealed that it had made a provision of £19.1m for all legal claims.

Boohoo has been accused of running sham sales and promotions for its products, including the PrettyLittleThing and NastyGal brands, for at least four to five years.

A case filed in the Central District of California alleged that Boohoo offered heavy discounts to US customers based on inflated original prices which, it was claimed, it had never previously asked customers to pay.

Boohoo failed in a bid to have the case thrown out of court last November.

However, today, the listed group provided an update on the case to the stock exchange.

It said: “Boohoo is pleased to report that the parties have notified the District Court that they have agreed to the terms of a preliminary settlement relating to the claim.

“The preliminary settlement will be covered in full by the existing provisions disclosed in the group’s latest published accounts.

“Whilst there is no guarantee that the preliminary settlement will result in a final settlement of the claim, the parties will now work together to incorporate the terms of the preliminary settlement into a legally binding settlement agreement.”