Ann Taylor and its sister brand LOFT Outlet have settled multiple class action lawsuits alleging they misrepresented clothing prices to customers. The most recent settlement, finalized in 2024-2025, makes $5.1 million in vouchers available to shoppers who purchased items from these outlet stores, with each eligible person receiving an $11 store credit. But this isn’t a new problem—the company has faced repeated legal challenges dating back to 2016 for the same core deception: advertising phantom discounts by claiming items were marked down from higher prices when they were actually manufactured exclusively for the outlet at the lower price.
Multiple settlements and an ongoing 2026 lawsuit demonstrate how Ann Taylor’s pricing practices have triggered continuous legal scrutiny across different decades and different schemes. From false comparison pricing in the past to hidden online checkout fees in the present, customers continue to discover they’re being charged or misled in ways that violate federal and state consumer protection laws. Understanding which settlement applies to your purchases—and when to file a claim—requires knowing the specific class periods and what each lawsuit alleged.
Table of Contents
- What Are Phantom Markdowns and How Did Ann Taylor Use Them?
- How Much Money Was Available from the Original Settlement?
- What Is the Recent 2024-2025 Settlement and Who Qualifies?
- How Does the New 2026 Lawsuit Differ from the Previous False Pricing Claims?
- What Are the Key Limitations When Filing Claims?
- What Should You Do If You Received a Settlement Notice?
- What Does This Pattern Tell Us About Retailer Pricing Practices?
- Conclusion
What Are Phantom Markdowns and How Did Ann Taylor Use Them?
Ann Taylor’s outlet stores engaged in a specific pricing deception called “phantom markdowns” or false comparison pricing. The company would advertise that items were on sale—marked down from an original higher price—when in reality, those items were manufactured exclusively for outlet stores at the lower price point. There was no legitimate “original” price to mark down from. A customer walking into an Ann Taylor Factory store might see a dress labeled as “originally $79.99, now $39.99,” believing they were getting a substantial discount, when the dress was actually produced at the factory price of $39.99 and never sold at the higher price anywhere.
This practice is illegal under consumer protection statutes because it tricks buyers into thinking they’re receiving better value than they actually are. The Federal Trade Commission views such comparisons as deceptive advertising. Between May 5, 2012 and May 4, 2016, the original lawsuit alleged this occurred repeatedly at Ann Taylor Factory and LOFT Outlet locations. Named plaintiffs Siobhan Morrow and Ashley Gennock filed the initial complaint in California and Pennsylvania courts on May 4, 2016, after discovering they had paid what they believed were discounted prices that were actually just the regular outlet prices.
How Much Money Was Available from the Original Settlement?
The original settlement, which received preliminary approval on December 14, 2017, from U.S. District Judge J. Paul Oetken in the Southern District of New York, totaled $6.1 million. Of that amount, over $5.1 million was distributed as customer vouchers and approximately $500,000 covered administrative and legal costs.
Each customer in the class period received either $5 in cash or a $12 store voucher—amounts that reflected a small fraction of what buyers paid on the misleading transactions but still represented compensation for the deception. A significant limitation of that original settlement is that most of the money was given as store vouchers rather than cash, and many customers never redeemed them. Store vouchers require shoppers to return to the retailer and make new purchases, which doesn’t refund the money they overpaid on the original deceptive transaction. Additionally, if customers didn’t claim their settlement voucher within the claim period, the money went unclaimed. This structure meant that while the headline settlement figure was $6.1 million, not all eligible customers actually received compensation.
What Is the Recent 2024-2025 Settlement and Who Qualifies?
A more recent settlement covering a different class period (September 4, 2018 through May 28, 2025) made an additional $5.1 million available in vouchers. Under this settlement, eligible customers receive an $11 voucher per person, usable only at Ann Taylor Factory or LOFT Outlet physical stores—not online. The claim deadline for this settlement is September 10, 2025, meaning you must file your claim by that date to receive your voucher.
The qualifying states for this recent settlement are California, New York, Ohio, Oregon, Pennsylvania, Texas, Washington, and Wisconsin. If you shopped at an Ann Taylor Factory or LOFT Outlet store during the class period and live in one of these states, you likely qualify. However, there is again an important caveat: the $11 is a voucher, not cash, and it can only be used in physical retail locations, not for online purchases. Customers who prefer not to shop at outlet stores or who have moved away from a store location may find the voucher of limited practical value.
How Does the New 2026 Lawsuit Differ from the Previous False Pricing Claims?
While the older settlements addressed phantom markdowns at physical outlet locations, a new lawsuit filed on February 26, 2026, in U.S. District Court for the Southern District of New York (case *Sun et al. v. Premium Brands OpCo LLC*) alleges a different deceptive practice: hidden junk fees during online checkout.
The complaint accuses Ann Taylor and LOFT of practicing “drip pricing”—concealing mandatory processing and handling fees until the final stages of purchase, violating California and Virginia honest pricing laws that require all mandatory fees to be disclosed upfront. In the new lawsuit, a California plaintiff reported being charged $8.95 for a bundled shipping and processing fee on a December 2025 purchase that only appeared at final checkout. A Virginia plaintiff was charged $16.95 for a bundled shipping and handling fee on a July 2025 purchase that similarly wasn’t disclosed until the payment screen. These hidden fees are fundamentally different from false comparison pricing—they don’t involve misleading markdowns, but rather charging customers for services without transparent disclosure. The lawsuit is ongoing as of 2026, and no settlement has been reached, meaning the company has not yet admitted liability or agreed to compensate affected customers.
What Are the Key Limitations When Filing Claims?
Settlements for class actions involving deceptive retail pricing practices have built-in limitations that reduce their actual value to consumers. First, you must file a claim by the deadline—September 10, 2025 for the recent settlement—or you forfeit your voucher entirely. Many class members never receive settlement notices or miss deadlines, resulting in unclaimed funds. Second, the compensation is typically far lower than what customers actually lost. If you bought a dress thinking you were saving $40 through a fake markdown but only paid $40 total, an $11 or $12 voucher doesn’t fully compensate for the deception or the emotional cost of discovering you were misled.
Third, vouchers often don’t carry the same consumer value as cash. A customer who no longer shops at Ann Taylor or LOFT, or who lives far from a store location, may find an $11 in-store voucher nearly worthless. There’s no online redemption option for the recent settlement, restricting how and where the credit can be used. Additionally, if the company changes its business operations—for instance, if it closes stores or restructures its outlet locations—the voucher could become impossible to redeem at all. Finally, store vouchers sometimes expire, though expiration dates vary by settlement.
What Should You Do If You Received a Settlement Notice?
If you received a settlement notice for either the original or recent Ann Taylor settlement, you should take immediate action to file a claim before the deadline expires. For the 2024-2025 settlement with the September 10, 2025 claim deadline, gather documentation of your purchases at Ann Taylor Factory or LOFT Outlet during the class period if you have receipts, or simply verify that you are a resident of one of the qualifying states and did shop at these outlets between September 4, 2018 and May 28, 2025.
The settlement administrator website will guide you through the claim process, typically requiring you to provide basic information and confirming your eligibility. If you believe you should be eligible but didn’t receive a notice, check the settlement administrator’s website directly—sometimes notices don’t reach customers due to address changes or data errors. For the ongoing 2026 lawsuit alleging hidden fees, you should monitor for updates and future settlement notices if you made online purchases from Ann Taylor or LOFT and were charged unexpected processing or handling fees that weren’t disclosed until checkout.
What Does This Pattern Tell Us About Retailer Pricing Practices?
Ann Taylor’s repeated legal troubles—from phantom markdowns in 2012-2016, to another false pricing settlement in 2018-2025, to hidden fees in 2026—illustrate a broader retail industry problem. Many consumers don’t realize that deceptive pricing takes multiple forms, and the same company can use different schemes in different eras. The shift from false comparison pricing at physical stores to drip pricing at online checkout shows how retailers adapt their deceptive tactics when one scheme gets challenged.
It also suggests that regulatory enforcement, while present, hasn’t prevented the behavior from recurring. Future online shoppers should expect more scrutiny of drip pricing across the retail sector, as states like California and Virginia increasingly enforce laws requiring upfront disclosure of all mandatory fees. For consumers dealing with Ann Taylor and LOFT specifically, the pattern suggests careful attention to final checkout screens and reviewing receipts for unexpected charges. The existence of multiple overlapping settlements from different time periods also means you could potentially qualify for more than one—if you shopped at these outlets in both the 2012-2016 period and the 2018-2025 period, you may have separate claims available.
Conclusion
Ann Taylor’s False Comparison Price Class Action settlements represent two different waves of deceptive pricing that affected millions of customers. The 2024-2025 settlement provides $11 vouchers to eligible shoppers in eight states for purchases made between September 2018 and May 2025, with a claim deadline of September 10, 2025. If you were a customer during this period, you should file your claim immediately, understanding that the $11 voucher is valid only in physical store locations, not online.
Beyond these settled cases, the new 2026 lawsuit alleging hidden online checkout fees shows that Ann Taylor continues to face consumer protection challenges. While settlements don’t fully compensate for deceptive practices, they do represent the company’s acknowledgment of wrongdoing. Monitor for future updates on the drip pricing lawsuit, and always review your receipts and final checkout screens carefully when shopping online or in stores—because the pattern suggests retail deception doesn’t disappear, it just evolves.