MARKS & SPENCER could be fined up £15,000 over allegations it misled customers over price cuts at its McArthur Glen discount store.

The family retailer is accused of putting price tags on its clothing which showed a bigger reduction than customers were actually receiving.

Customer Julia Tomlinson became suspicious after she received a set of pyjamas as a present from her daughter with a ticket showing a price of £19 reduced to £10 - but with another sticker showing £13 underneath.

"I knew that the items sold at the outlet were from a previous season's stock," she said.

"But it seemed to be less of a bargain than they were making out."

She complained to City of York Trading Standards officials who carried out two test purchases at the McArthur Glen outlet on January 13, 2004.

Fair trading officers Jackie Stockton and Rachel Wildman bought two items of clothing which each had two different price stickers on them.

A baby outfit was marked as, "was £12, now £8", but had another tag displaying the price £10.

A sweater had a ticket displaying a reduction from £32 to £19, but also contained another tag showing the price £29.

Mrs Stockton, giving evidence at Pickering Magistrates Court, yesterday said she wrote to the store manager asking for information and found discrepancies over the prices.

Marks & Spencer is charged with three offences of giving misleading indication of price under section 20 of the Consumer Protection Act.

The company denies the charges.

District judge Roger Elsey, sitting at Pickering Magistrates, heard the company has 20 discount outlets operating independently from its 270 high street stores in the UK.

Mark Tweed, former buyer for Marks & Spencer in ladies' sleepwear, said the short-sleeved pyjama set was originally ordered from an Indian supplier and sold in its high street stores for £19 in spring 2002.

The line was so popular that it was restyled as a long-sleeved pyjama and sold on the high street that autumn also at £19.

"The pyjama set sold at the outlet store in 2004 was made out of surplus fabric which was left over from the two previous seasons," he said.

"It was marketed at £13 and had the motif Pillow Talk on it but was essentially the same pyjama set sold in the spring 2002 range."

William Gill, head of buying for Marks & Spencer's discount outlets, said the baby-grow set was originally sold for £12 in its high street stores from January 2002.

In July 2002, the item was moved to a new nursery department and its price reduced to £10 - but later increased back to £12.

The confusion arose when the remaining baby-grows were moved on to the discount outlets when the higher price had only been in operation for 21 days - less than the 28-days needed by law.

The sweater was sold at £29 in high street stores until June 2002, when the price was increased to £32, but later reduced to £22 in the winter sales. Sweaters were then sold in the discount outlet for £19, but still had a ticket showing a mark down from £32.

The case continues.

Updated: 09:50 Thursday, August 04, 2005