Last week, I caught this segment on the Today Show, talking about two class action lawsuits against two retailers (JCPenney and Kohl’s) for allegedly setting “misleading” prices. The report warns consumers to be on the lookout for “sale” prices that turn out to look an awful lot like the manufacturer’s suggested retail price.

Turns out, the story behind the story is a lot more complicated than that. In the case of Kohl’s, an appeals court in California overturned a lower court’s ruling that now paves the way for Kohl’s to be sued in a case that centers on purchases made in May 2010. There are a lot of technical legal details involved in the decision, but the part that should make retailers sit up and take note is the part where the California court basically ruled that consumers can sue retailers for advertising prices as “sale” prices when they are actually “regular” prices, even if the consumers keep the items they purchased, and even if the “sale” prices are “fair”.

The public commentary is much more fun – and jaded, with many commenters posting “Haven’t retailers been doing this forever?”

The thing is, the Today Show didn’t have to run their story with the angle they did – they basically treated the whole thing as a consumer alert, even ending the piece by exhorting consumers to research prices online before making any important purchases. But the story that inspired the piece is actually a lot more interesting to the business press – and especially to retailers, because it opens retailers to a lot more potential lawsuits if they aren’t careful about their promotions, especially in California where the law is the strictest.

What does this tell me? We have entered an age of price promotion that has jumped the shark – it is a trend that has peaked and doesn’t know it yet. Today didn’t have to take an angle that poked at consumers’ sensibilities, but they did, obviously because they felt it was an angle that would generate consumer interest. So it seems to me that they are at least testing the waters to see if consumers are getting tired of the relentless search for the best deal – and if retailers are starting to be perceived as unfairly taking advantage of this drive, coupled with Americans’ apparently less-than-stellar math skills when it comes to understanding sale prices.

Is a consumer backlash around the corner? Well, we have seen from our own research that retailers are hyper-reactive to consumer price sensitivity, perceived, real, or otherwise. As far as we can tell, the gap between consumers’ actual price sensitivity and retailers’ reactions to that sensitivity is only getting larger: for consumers, the moment of heightened price sensitivity has passed. For retailers, the addiction to the traffic boosts and top line results seem to have only just begun.

So I’ll throw it out there to get it on the record. To me, this smells like the beginning of the end. It will only take one retailer behaving badly this holiday season and it will all be over. Don’t get me wrong, however – I don’t think it’s a bad thing. In fact, it may be exactly the thing we need to get back to rationale pricing behavior, especially as it appears the economy is carefully, slowly improving.