Like many Idahoans, I participated in post-Thanksgiving sales. Though weighted down by turkey and other fixings, I managed to wobble out of the house Thursday night and get our family to fight through the thicket of people doing their level best to take advantage of bigger-than-you-can-possibly-imagine discounts.
Now, I’m not here to mess up your Thanksgiving tradition of bargain hunting. But I am here to tell you that I, my friends and family, political compatriots and political rivals, all participated in an illegal activity. And I’m OK with that.
In 1939, the Idaho Legislature passed a law that remains on the books to this day. It’s called the Unfair Sales Act. The law, which has changed little since Depression-era legislators passed it, says, “The practice of selling certain items of merchandise below cost in order to attract patronage is a deceptive form of advertising and an unfair method of competition. Such practice misleads the consumer, works back against the farmer, obstructs commerce and diverts business from dealers who maintain a fair price policy, with the result of unemployment, underpayment of employees, excessive working hours, nonpayment of taxes and an inevitable train of undesirable consequences including economic depression. This act is designed to make illegal such practice and to promote the general welfare of the state of Idaho.”
Idaho’s law requires that retail prices be marked up to cover the cost of doing business, and in the absence of evidence to the contrary, that the markup be 6 percent. Now, if you bought a 40-inch high definition TV after Thanksgiving, at a cost of $150, it’s fairly evident that the sale violated state law, and the penalty for violations—which includes the simple act of advertising items for sale at below cost—is $500 for each offense and up to six months in prison.
Idaho’s law mirrors those found in Wisconsin and Oklahoma. In the case of Oklahoma, Attorney General Scott Pruitt opined that stores would be in violation of state law if retailers offered items for sale at below cost. “The Unfair Sales Act applies equally during the holiday shopping season as it does throughout the rest of the year,” Oklahoma officials said.
Oklahoma still has Black Friday deals, but ever since Pruitt released his opinion, consumers are finding less dramatic sales than neighboring states. One TV reporter noted that Kansas shoppers can buy a 60-inch smart LED TV for less than $700, while Oklahoma residents were paying close to $1,000 for the same device.
And some national retailers have been specific to note that on their advertisements that the great deals in their circulars don’t apply to Sooner State stores.
Idaho’s law isn’t designed to protect consumers; it has the opposite effect. In 2003, the Federal Trade Commission examined Wisconsin’s law and wrote, “Minimum markup laws likely deter pro-competitive price cutting and can ultimately lead to higher prices for consumers. They can prevent efficient vendors from passing on savings to consumers, and they can discourage entry from new competitors that may be more efficient.”
On Thanksgiving night, we got to see a robust free market in action, but only because Idaho’s dumb relic Unfair Sales Act has been forgotten. But now you know about it. And so do Idaho retailers. And wholesalers. And regulators. Unless lawmakers make a change, I expect Thanksgiving 2013 will be far less lucrative for the state’s businesses, consumers and economy.