Retail grocer Whole Foods has a whole lot of explaining to do.
The natural food supermarket chain will have to fork over nearly $800,000 in penalties and fees after a statewide investigation found it had overcharged customers for various foodstuffs. In addition, the company will have to conduct random audits and enlist “state coordinators” to oversee pricing accuracy as part of a five-year injunction announced earlier this week.
The consumer protection case was brought by the cities of Santa Monica, Los Angeles, and San Diego on behalf of the State of California. All of their city attorneys will receive $210,000 from Whole Foods as reimbursement. County and state agencies which conducted the investigation will receive $68,394. Those figures come on top of $630,000 in civil penalties and another $100,000 to be placed in a consumer protection trust fund.
The more than year-long investigation revealed that Whole Foods failed to deduct the weight of containers when assessing salad and hot bar prices, served products that weighed less than the labels’ stated amount, and sold items by piece rather than by pound as required by law.
"Consumers have a right to accurate pricing - and the right to pay for only what they bought,” said Santa Monica Deputy City Attorney Adam Radinsky. "By adding the weight of containers and packaging, especially on higher-priced, per-pound items like seafood and meats and even prepared food, the extra charges can add up fast, and yet be hidden from consumers." Radinsky added that he hopes the case will serve as a “wake-up call” to other food retailers.
In a statement, Whole Food, Inc. representatives said they had cooperated fully with the investigation and that they “will continue to refine and implement additional processes to minimize such errors going forward."
Whole Foods operates 74 stores in California. While the $800,000 in fees and penalties is dwarfed by the company’s $13 billion annual revenue, the negative publicity is sure to hurt the natural foods retailer, which has already been losing customers to grocery giants like Kroger and Wal-Mart.