Michael Kors Holdings Accuses Costco of Bait and Switch

Luxury designer is suing the big-box retailer for allegedly advertising handbags it doesn't sell.
2:05 | 07/16/13

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Transcript for Michael Kors Holdings Accuses Costco of Bait and Switch
Thank you, josh. Now, to the new trouble for costco, under fire from a top designer. Michael kors is suing the store for false advertising, accusing the warehouse giant of using his handbags in ads to attract customers. And it's not the first time that costco has been slapped with this kind of lawsuit. Aditi roy is here with the story. Reporter: Michael kors handbags, chic and exclusive, adorning the arms of hollywood celebrities. Now, the luxury designer who judged "project runway," is asking a real-life judge to weigh in. Michael kors is suing costco for allegedly falsely advertising its bags for at least half the price. It's michael kors' decision if it wants to go down to a lower price point at a store where you're able to buy jumbo-sized toilet paper before you buy a luxury bag. It doesn't necessarily want to make that leap down yet. Reporter: The suit claims that costco set out an e-mail for mother's day, showing pictures of michael kors bags, that advertise the designer purses for as low as $99. The problem is, costco doesn't sell michael kors bags. Michael kors sent its people to 19 costco stores. And found no michael kors purses on the shelves. The complaint calls it a bait and switch scheme, to lure customers away from michael kors and into costco. Earlier this year, tiffany took costco to court, for allegedly making its customers think that diamond rings were from the jewelry store. Costco said that tiffany is describing the setting. This latest suit, the retailer may be risking its relationship with the luxury brands that it does carry. Costco's a low-end brand that they don't want to be associated with, that could negatively affect other brands. Reporter: The discount retailer has been sued in the past. We called up costco and the company declined comment. We called up michael kors and did not hear back.

This transcript has been automatically generated and may not be 100% accurate.

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