Walmart has agreed to pay $5.6 million settling a consumer protection lawsuit alleging the company systematically overcharged customers and sold products with improper weights.
California County DAs Unite Against Retail Ranger’s Deceptive Practices
Jeff Rosen, the District Attorney for Santa Clara County, was rather blunt in discussing the settlement, saying “When someone brings an item to the register to be scanned, the price must be right. They expect it. California expects it. My office expects it – and we will apply the law to make sure of it”.
The breaches of compliance were not one-time occurrences. Staff members from the Santa Clara County Weights and Measures Division conducted broad price audits and discovered Walmart’s systematic price discrepancies between the advertised prices and the prices charged at the registers. These systematic problems spanned across all of Walmart’s 280 stores in California, creating price adjustment issues for potentially thousands of transactions every single day.
Analyzing the Structure of the Settlement
Separating the financial aspects of the settlement emphasizes the nature of violations committed by the company. Walmart will incur a $5.5 million civil penalty as a result of violating the California False Advertising and Unfair Competition Act. Another $139,908.92 will cover the investigation costs of the various Weights and Measures Departments across the state.
Santa Clara County will receive $1.375 million, specifically for the County’s Consumer Protection Fund, and which will be earmarked for preventing and prosecuting cases of consumer fraud. This earmarking protects the fund from diversion and ensures that the region’s consumer protection strategies can be sustained.
As noted, the Walmart settlement will not result in direct payments to subscribers but instead serve as civil penalties paid to the government. California customers who feel wronged by Walmart for apparent overcharging, however, have the right to be price adjusted at Walmart stores and report the discrepancies to the county Weights and Measures divisions.
The agreement further requires that Walmart has designated personnel responsible for accuracy in pricing and weight measurement in all California stores. This measure focuses on ensuring the company does not restructure its operations within the company to circumvent compliance.
This is not Walmart’s first run-in with California regulators on pricing matters. The company has a history of problematic pricing practices, receiving a 2012 California enforcement order requiring Walmart to pay $2.1 million for overcharging its customers, suggesting a persistent problem that is of interest to state enforcement authorities.