Are you really 'saving money' at the outlets?

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HOUSTON, Texas - Coach, Kate Spade and Tory Burch: They're high-end brands with prices to match, unless you're willing to make the haul to an outlet mall.  News4jax's sister station in Houston, KPRC, went undercover to see if some retailers are lowering their own standards and selling cheaper stuff at a discounted price.

"Now most of the clothing that you find in outlets is made just for the outlets," said clothing designer David Peck. "It's usually not as good of quality."

KPRC confirmed it at Guess, Ann Taylor, Coach, Banana Republic and countless other retailers. Most products sold in their Houston outlet stores were never sold in their regular retail stores.

"Oh really? I didn't know that," said shopper Shelly Stubbs, who had just finished a shopping trip at the Houston Premium Outlets.

It's not information manufacturers want to discuss. When KPRC emailed the corporate offices of 14 retailers inquiring about the inventory at their outlets, only one replied. A spokesperson for Banana Republic emailed this statement:

"The product sold at Banana Republic Factory Stores is designed and produced specifically for Factory stores - offering customers a unique combination of style, quality and value."

KPRC went shopping wearing a hidden camera to find out what sales associates would say about the difference in outlet products versus items sold at mainstream stores.

"You said pants are very similar. What's different?" KPRC asked an employee at the Ann Taylor Outlet.

"The fabric, the fabrication might be just a little different between their store and our store," the woman replied.

At the Kate Spade Outlet, a sales person explained, "It's the little things. You'll be able to see the difference in the linings of some of the handbags."

So, are these retailers making knock-offs of their own products?  Clothing designer David Dang says yes.

"They're actually making versions of it," he added.

Dang worked for a manufacturer in New York where he designed clothing for both the regular retail and the outlet stores of the same brands.

"In order to actually achieve the price point, you really do have to alter the garment a little bit," Dang said..

Retailers do that with less expensive zippers and hardware; but the problem comes when retailers try to pass off these lower quality goods as seconds from their high-end stores. Earlier this year, four lawmakers asked the Federal Trade Commission to investigate pricing practices at outlet stores.

In a letter to the FTC Chairwoman, they wrote "Many outlets may also be engaged in deceptive reference pricing. It is a common practice at outlet stores to advertise a retail price alongside the outlet store price-even on made-for-outlet merchandise that does not sell at regular retail locations. Since the item was never sold in the regular retail store or at the retail price, the retail price is impossible to substantiate. We believe this practice may be a violation of the FTC's Guides Against Deceptive Pricing (16 CFR 233)."

There are ways to tell if products are the real deal or the ones made for outlet stores. At Ann Taylor, J. Crew and Banana Republic, the labels on products made for the outlet have two small diamonds or dots below the brand name. There are no dots on the labels of the retailers' regular merchandise.

At the Coach Outlet, an employee told us the tags used to say "Factory" under the Coach logo, but the company changed the tags, making it more difficult for consumers to tell which bags were designed specifically for the outlet store.

Now tags on bags made for the Coach Outlet read "Est. 1941" under the logo. The high-end bags have "New York" printed under the logo.

But what are you really getting for your money? Designer David Peck to look at clothes bought from both the outlets and regular stores to see if he could tell the difference.

A pair of shorts at the Ann Taylor outlet cost $19.99. A similar pair from a regular Ann Taylor cost us $69. Peck turned the shorts inside out to look at the way they were put together. He revealed the more expensive shorts have a more sophisticated seam.

"This would probably be three times the cost of this, just for that little seam," said Peck, pointing to the different sewing techniques on both garments. He guessed the outlet clothes from similar retail store versions every time.

A pair of men's Guess shorts at the outlet cost us $34.99. A pair that appeared the same was $47.70 at a regular Guess store. Peck said the pocket linings in the more expensive shorts were made with a pricier fabric.

It was $42 for women's pants from the Banana Republic Outlet and $89.50 for a pair from the regular store. When Peck inspected them both, he said it was obvious the retailer skimped on the lining in the outlet shorts.

"This feels a little stiff... a little plastic-y," he said.

When he compared two Coach handbags, he was not as certain which was the outlet version.

"This one feels like it's a little softer, more supple," said Peck, referring to the Coach Outlet bag.

The outlet purse cost $94.99. The Coach bag purchased at the regular store  was $378.

"It really is a toss up," said Peck, even though he guessed correctly.

The designer said Coach is one company that concentrates more on its outlets.

"Their main focus is selling a lot of bags at a very reasonable price, but still having that idea of luxury," said Peck.

He says Coach bags in the high-end stores are very similar with a higher mark-up.

The bottom line: If you like the less expensive outlet version, buy it. But know you're not really getting a bargain. You're more likely paying what the product is actually worth.

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