Summary (tl;dr)

Old Navy is currently facing a new class-action lawsuit in California alleging deceptive pricing practices, claiming the retailer inflates original prices to create an illusion of significant discounts. Simultaneously, the company is central to a legal trend in Washington state stemming from a Supreme Court ruling that broadly interprets the state's Commercial Electronic Mail Act, leading to numerous lawsuits over misleading email subject lines and prompting recent legislative changes.

Essential Background

In California, Old Navy has faced prior legal challenges regarding its pricing strategies. The company settled two similar lawsuits in recent years, paying over $140 million in 2019 and up to $340 million in 2022, concerning allegations of misrepresenting discounts by inflating original prices. Despite these settlements, a new complaint claims the practice continued.

In Washington state, a federal lawsuit filed in 2023 by a Pierce County woman against Old Navy sought clarity on the scope of the state's Commercial Electronic Mail Act (CEMA). The lawsuit alleged that Old Navy's email subject lines created a false sense of urgency by misstating the duration of promotions. This led to a significant ruling by the Washington Supreme Court in April 2025, which affirmed that CEMA prohibits any false or misleading information in email subject lines, not just those concealing commercial intent.

The Full Story

On April 8, 2026, a new class-action lawsuit was filed against Old Navy's parent company, The Gap Inc., in San Francisco County Superior Court. The complaint alleges that Old Navy systematically inflates reference prices on most of its merchandise to create the false impression of deep discounts when customers are actually paying everyday prices. The lawsuit, filed by Fantasia King Bell of Stockton, California, claims that Old Navy never sold many advertised items at their stated "reference prices," based on price-tracking software observations. This legal action seeks restitution, an injunction to halt the alleged pricing practice, and the removal of certain dispute resolution terms.

Concurrently, the Washington Supreme Court's April 2025 ruling in the Old Navy-related CEMA case has had a widespread impact on businesses. This broad interpretation of CEMA, which penalizes even subjective statements like "best deal of the year" if deemed misleading, has resulted in over 80 related lawsuits against various retailers in Washington courts since the decision. In response to concerns from industry groups, Washington Governor Bob Ferguson signed House Bill 2274 into law in March 2026. This bipartisan bill aims to revise CEMA by requiring knowledge that a subject line is false or misleading for it to be a violation and decreases statutory damages for recipients of violating emails, potentially slowing the surge of new lawsuits.

Why It Matters

These legal challenges highlight a growing scrutiny over advertising transparency and consumer protection in both online and in-store retail. The California lawsuit against Old Navy underscores the ongoing debate around "phantom markdowns" and deceptive pricing, which can mislead consumers into believing they are receiving a better deal than they actually are. If successful, this could lead to significant financial penalties for Old Navy and potentially influence pricing strategies across the retail sector to ensure greater honesty in advertised discounts.

The Washington CEMA ruling and subsequent legislative adjustments demonstrate the evolving legal landscape for digital marketing. The initial broad interpretation of CEMA by the Supreme Court created considerable legal risk for businesses engaging in email marketing, prompting a wave of lawsuits. The new state law, House Bill 2274, reflects an attempt to balance consumer protection with the practical realities faced by businesses, particularly in the realm of email marketing. This trend signifies a tightening of regulations around commercial communications and could set precedents for how retailers craft their marketing messages nationwide, urging them to be more precise and factual in their promotions to avoid legal repercussions.

Geographic Location

• San Francisco County Superior Court, San Francisco, San Francisco County, California, United States (new class action lawsuit filed against Old Navy for deceptive pricing)
• Stockton, San Joaquin County, California, United States (residence of the plaintiff in the California lawsuit, and location of an Old Navy store where an alleged deceptive purchase occurred)
• Pierce County, Washington, United States (residence of a plaintiff whose federal lawsuit against Old Navy led to a key Washington Supreme Court ruling)
• U.S. District Court for Western Washington, Washington, United States (where the initial federal lawsuit against Old Navy was filed)
• Washington Supreme Court, Olympia, Thurston County, Washington, United States (issued a significant ruling on the Commercial Electronic Mail Act, prompted by the Old Navy lawsuit)
• Washington State, United States (enactment of House Bill 2274 modifying the Commercial Electronic Mail Act)