Business

Boohoo founder fights to avoid giving evidence in US lawsuit

Boohoo’s co-founder Mahmud Kamani has become locked in a battle over whether he must give evidence in a $100m lawsuit alleging the online retailer used fake promotions to mislead shoppers.

The Aim-listed company and its other brands PrettyLittleThing and NastyGal are accused of deceptive pricing by running sham sales and promotions in the US for at least four to five years.

The row over whether Kamani, who is executive chair of Boohoo, should have to answer lawyers’ questions under oath in a deposition threatens to embarrass the company by lifting the lid on its inner workings. Emails from Kamani to staff and executives were disclosed in documents filed in a Los Angeles court last week.

The case is the latest threat to the reputation of Boohoo, which has been under scrutiny over how workers in its supply chain are treated and for some of its advertising.

The pricing allegations, contained in a lawsuit filed in the Central District of California last year, focus on a claim that Boohoo offered heavy discounts to US customers based on inflated, or “fake”, original prices which were almost never the prices it had previously asked customers to pay.

Boohoo has previously said it intends to defend the case but declined to comment on the latest developments.

Lawyers for the claimants in the consumer class action have said previously that the company — which has also been reprimanded by the UK’s Advertising Standards Authority for misleading discount claims and the use of “countdown clocks” pressuring people to buy before a discount ended — could face a total damages bill of more than $100m if the claims succeed.

They said Kamani must give evidence because he has unique, first-hand knowledge of facts relevant to their claim, citing emails he sent to staff in 2019 as he took personal control of the marketing campaign for a brand launch in Australia.

The emails were evidence of “the same false pricing tactics” that are alleged in the Californian case, they said.

In the emails, Kamani questioned the company’s marketing strategy in Australia. He wrote: “Why are we putting . . . [branding] ads out without a massive offer . . . WE WANT SALES SALES SALES . . . not interested in any other bollocks”.

Instructing staff to “put massive offers on the screen”, he also said that all marketing spending was to be approved by him directly.

“I want to see and approve every penny cent,” he wrote. “We’re doing this my way . . . the way that works,” he added.

Kamani’s co-founder Carol Kane and Boohoo’s chief executive John Lyttle were both copied on the email chain.

Boohoo, which failed in an attempt to have the case thrown out of court in November, has objected to the claimants’ request that Kamani answer their questions.

The company argued that he “is not customarily involved in setting prices for individual items or in making advertisement decisions” and that more junior staff with first-hand knowledge of the campaigns should testify instead.

If Kamani is required to answer questions, the court should limit this to two hours, it added.

The 2019 correspondence is reminiscent of emails revealed in a UK report on Boohoo’s treatment of suppliers, published last year. In the report, Alison Levitt, the senior lawyer in charge of the inquiry, cited 2018 emails from Kamani to senior Boohoo managers. “We are in a mess and it needs fixing . . . I now want to be in EVERY internal meeting you have with buyers,” he wrote, adding: “Buying is going to change and I’m going to control and head it up for now . . . I want to clean our act up.”

Levitt concluded that “it is clear that Mr Kamani has a strong personality and may not always be aware of the effect this has on others”.


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