Walmart (WMT) is being forced to face the music, which in this case is a class-action lawsuit. A new court order is forcing the retail giant to face a lawsuit that accuses the company of having “deceptive” pricing practices that involve using a bait-and-switch tactic to fool customers at cash registers.
The lawsuit was filed by Walmart customer Yoram Kahn in 2022. He alleges that he found “numerous small discrepancies” between what Walmart advertises on its shelves and what customers are actually charged at cash registers.
He claims that when he shopped at a Walmart in Illinois in 2022, he purchased 15 items at the store for $27.69. After he paid for the items, he reviewed his receipt and found that he was charged 10% to 15% more than the listed shelf price on six items, paying Walmart $1.89 in overcharges.
Related: Costco unveils major membership fee update
Kahn’s counsel later investigated Walmart’s shelf pricing at other stores in multiple states, such as Florida, New York, Indiana, Maryland, and New Jersey, and they allege that they found similar examples of “unfair and deceptive pricing practices” that resulted in overcharges.
“Walmart knows that it overcharges consumers through its unfair and deceptive pricing practices,” reads the 2022 lawsuit. “Even though Walmart has been fined locally for these practices — essentially a slap on the wrist for this $500-billion-dollar retailer — it has continued to allow its stores to charge more for overcharged goods than what is advertised on the deceptive shelf pricing and implement institutional systemic controls to prevent such practices, willfully continuing to mislead and overcharge consumers.”
Kahn’s lawsuit was dismissed last year by a district court in Illinois because it concluded that Walmart “provides its customers with a receipt to compare the scanned price with the shelf price.”
However, a new court order, issued on July 3 in a federal appeals court in Chicago, reverses that dismissal. It says that consumers can “easily miss” price discrepancies among items for a number of reasons while shopping and that keeping track of shelf prices by memory or by documenting them (which Walmart expects customers to do) is unreasonable.
Related: Walmart tries to bury Amazon with huge new investment
“Who does that?” wrote Judge David Hamilton in the court order. “For obvious reasons, many reasonable consumers will not undertake such audits. Some consumers lack smartphones to photograph the shelf prices as they shop, requiring them to write down or remember dozens of distinct shelf prices. Others lack the time to retrace their steps through the store, comparing their receipts against all the shelf prices.”
In an emailed statement to TheStreet responding to the new court order, a Walmart spokesperson said it is committed to providing customers with low prices in its stores.
“We’ll always work to provide our customers everyday low prices they can count on,” wrote the spokesperson. “We are confident in the evidence and look forward to arguing our case."
This is not the first time Walmart has been accused of deceptive pricing practices. In June, Walmart agreed to pay a $1.64 million settlement to resolve allegations that it “repeatedly engaged in unlawful unit pricing practices” at its 64 stores in New Jersey by using “inaccurate” unit pricing for multiple grocery items.
More Retail:
- Sam’s Club customers threaten to end membership over new policy
- Tractor Supply has another boycott on its hands after radical change
- Dior pays a startling low price to produce a $2,780 hangbag
The settlement coincides with a major announcement that Walmart made that same month regarding how it will price items in its stores in the future. The retailer revealed that it will replace its paper shelf labels, which display product prices, with digital ones that will “significantly expedite the amount of time it takes to update the price of an item on a shelf.”
Walmart plans for the technology to be present in 2,300 of its stores by 2026.
Related: Veteran fund manager picks favorite stocks for 2024
