Racked is no longer publishing. Thank you to everyone who read our work over the years. The archives will remain available here; for new stories, head over to Vox.com, where our staff is covering consumer culture for The Goods by Vox. You can also see what we’re up to by signing up here.
Michael Kors, one of America's largest sportswear brands, is suing wholesale club Costco for false advertising. The issue stems from the Costco marketing email above, which was sent to Costco customers last April. Advertising Mother's Day gift ideas, including "designer handbags starting at $99," it includes images of several Michael Kors bags, many of which have the MK logo on prominent display.
The problem is that Costco does not sell MK bags. Per Kors' lawyers, "Costco is not, and never has been, an authorized dealer of Michael Kors handbags, and upon information and belief, Costco does not currently sell Michael Kors handbags." The complaint accuses Costco of using bait-and-switch tactics to deliberately "lure unsuspecting consumers away from bona fide Michael Kors retailers and into Costco stores."
That sounds reasonably cut-and-dried, but the law is actually a little dicey on this issue. Even without an official wholesale partnership with Michael Kors, Costco is permitted to sell the brand's goods. "The first-sale doctrine means that discounters have the right to sell designer goods if they can get them through third parties—provided that the goods are legitimate," Fordham Fashion Law Institute director Susan Scafidi explains to WWD.
Michael Kors' case hinges on evidence that Costco never had any Michael Kors handbags to sell. The company claims that they sent representatives to 19 Costco retail stores and found nary hair not hide of its bags in the brick-and-mortar locations, or on Costco's website.
· Michael Kors Sues Costco [WWD]
· Costco Still Selling Really Expensive Diamonds, Here's One for $2.3 Million [Racked]