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Target to Pay $5 Million for Overcharging Customers

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Do you trust that Target is always giving you its lowest prices? Sadly, maybe not. 


The big-box giant is coughing up more than $5 million to settle a lawsuit that it was overcharging and misleading customers thanks to variable pricing on its app, according to the San Diego County District Attorney's Office.


Related: Insider Secrets for Big Savings at Target


The lawsuit, filed by seven California district attorneys' offices, claimed that Target charged customers more than its own lowest advertised prices. When shoppers went into an actual Target store, the suit says, Target's app sometimes advertised different, higher prices than shoppers would have seen if they weren't in store. 


KARE 11, an NBC affiliate in Target's hometown of Minneapolis, details the issue below, with one customer saying she was charged $100 for an epilator in store, only to find that the price dropped to $70 as soon as she walked out into the parking lot. 


Target does price match its online prices. Of course, that's not much use for shoppers who are checking the app and potentially seeing higher prices while they're already in store.


The psychology behind the trick, according to George John, a marketing professor at the University of Minnesota: Shoppers who are already in store are more likely to buy. Those who aren't, however, may need a little more encouragement in the form of lower prices. "You've just revealed your commitment to buying the product" if you're in the store, he told KARE 11. "If you're farther away, you haven't quite committed."


Related: 10 Reasons Target Shoppers Avoid Walmart


For its part, Target has said "the majority of these issues occurred when promotional signs were not removed immediately after a promotion ended. If guests have questions, they can bring their receipt to the Guest Service desk to discuss a price adjustment."


The California judgment requires Target to stop showing higher prices based on an app user's location. However, whether that will be the case in the rest of the U.S. is unclear. 


In the meantime? To make sure you're getting the best deal, turn off the location services of your Target app. 


Gallery: 22 Ways Companies Trick You Into Spending More Money


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