close
close

Walmart faces class action lawsuit over alleged bait-and-switch tactics

Walmart faces class action lawsuit over alleged bait-and-switch tactics
Walmart faces class action lawsuit over alleged bait-and-switch tactics

A federal appeals court has ruled that Walmart must face a class action lawsuit accusing the company of charging customers higher prices at checkout than those displayed on the shelf.

Yoram Kahn first filed the lawsuit in 2022, claiming that “Walmart’s shelf prices often misrepresent the prices charged to consumers at the point of sale. As a result, consumers fall victim to a classic ‘bait and switch’ tactic and unknowingly pay Walmart a higher price for the misadvertised merchandise at checkout.”

More from Sourcing Journal

But in 2023, the Illinois district court where Kahn filed the lawsuit ruled that the case would not proceed after the wholesaler filed a successful motion to dismiss the case.

The appeals court’s ruling of July 3 was overturned. Walmart must now defend itself against allegations that it charges its customers an average of 5 to 10 percent more at the checkout than the prices displayed on store shelves.

In the complaint, Kahn said he purchased a number of food items that were more expensive than the price tags on the shelf. He claimed these pricing problems were not limited to Illinois, but “from coast to coast.” He noted price discrepancies at stores in Florida, Indiana, Maryland, New York and New Jersey, as well as other states.

The complaint also states that Walmart has been investigated or fined by several states — including California and North Carolina — over the past few years for its pricing practices. Kahn said those investigations have done little to deter Walmart from maintaining its status quo, noting that the government’s efforts “have been a game of whack-a-mole for local authorities, because even if Walmart is punished, the fines are a drop in the bucket for the $500 billion retailer, dwarfing the hundreds of millions of dollars Walmart makes each year from selling overpriced goods.”

Kahn has proposed a nationwide class action lawsuit that would include all consumers affected by Walmart’s allegedly deceptive pricing practices.

The district judge who dismissed the original case at Walmart’s request did so in part because she said Kahn had not provided enough evidence of deception on the retailer’s part. Had Walmart refused to give a customer a receipt, the outcome might have been different. But giving a customer a receipt allows them to verify the accuracy of Walmart’s pricing at the shelf, just as Kahn did, she said.

But, as the appeals court judge said in her ruling: “Who does something like that?”

The judge pointed to a number of reasons that might prevent customers from keeping an eye on shelf prices and comparing them with prices at the checkout: for example, they don’t have a smartphone to take pictures of shelf prices, they have to watch their children in the store, they don’t want to wait in long lines at the checkout, and more.

She continued: “Reasonable consumer behavior does not require shoppers to review their transactions and overcome these additional hurdles just to make sure they receive the goods at the advertised retail price.”

As a result of the judge’s decision, a court is now required to hear consumers’ arguments about deception and unfair commercial practices.

A Walmart spokesman said the company will continue to follow its mantra “Save money, live better.”

“We will always work to provide our customers with low prices they can rely on every day. We are confident in the evidence and look forward to presenting our case,” the spokesman said.