Which of the following are considered deceptive reference prices?

• A. Fictitious prices
• B. Inflated prices
• C. Both fictitious prices and inflated prices
• D. Neither fictitious nor inflated prices

Answer: (C)

Reference prices act as a benchmark buyers use to judge a deal. When that benchmark isn’t credible, the discount claim can mislead. Fictitious prices fit here because they present a price that the product never actually carried, creating a false impression of savings. Inflated prices do the same by pairing the sale price with a higher-than-real usual price, making the deal seem much better than it truly is. Both distort the perceived value and can run afoul of truth-in-advertising rules, since they rely on an unrealistic or untrue comparison. So, both fictitious prices and inflated prices are deceptive reference prices, since each misleads consumers about the true value of the offer. For example, claiming “was $100, now $50” when the item never sold for $100, or when the typical price is closer to $40, makes the discount seem much larger than it actually is.