Boohoo has revealed it is close to reaching a preliminary settlement agreement over a class action lawsuit about alleged misleading prices.
The case filed in California claims that the fashion retailer and a number of its brands, which includes Pretty Little Thing and Nasty Gal, offered large discounts to US shoppers based on false original prices that it never asked customers to pay in the first place.
If the claim had been successfully filed, Boohoo could have faced total damages of over $100 million, according to a report by The Financial Times.
As a result of a potential settlement, Boohoo shares increased by four per cent in early trade.
A statement issued to the London Stock Exchange said: “Boohoo today provides an update in respect of the class action claim brought against the group in the United States District Court for the Central District of California.
“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.”
“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.”
Earlier this year, it was reported Boohoo could be forced to pay damages of over $100 million as it becomes embroiled in another damning lawsuit claiming its brands run sham sales to mislead shoppers.
The fast fashion retailer’s reputation is once again under threat as its co-founder and executive chair Mahmud Kamani has been called on to testify under oath about the company’s inner workings.
Charged has contacted Boohoo for comment.