Organic food seller Whole Foods (WFM) agreed to pay an $800,000 settlement and adhere to strict oversight for five years after a California state investigation found “widespread pricing violations.”
Jokes about Whole Foods being so pricey it’s nicknamed, “Whole Paycheck,” aside. A one-year investigation by state and county Weights and Measures inspectors in California found the grocer was charging consumers more than the displayed price in a number of ways. The settlement was announced Tuesday in a statement from Los Angeles City Attorney Mike Feuer.
Ways Whole Foods overcharged consumers were varied. For instance, Whole Foods was charging consumers for the weight of vessels holding their organic foods, rather than subtracting it as required for self-serve foods as the salad bar and and the section of the food where consumers scoop up their own hot portions.
Another violation found by the inspectors was where consumers were given less food than listed on labels in foods sold by weight. Whole Foods also violated a requirement to sell foods by the pound, not by the piece, in the deli.
Whole Foods has agreed to a five year court injunction that will create more oversight over its 74 stores in California about the way it handles charging customers. These new safeguards include two so-called state coordinators to watch over pricing accuracy. There will also be a worker at every Whole Foods store in charge of monitoring pricing. Whole Foods must also randomly inspect the prices charged at stores for accuracy four times a year.
That’s in addition to the fines, including $630,000 in civil penalties, $100,000 to a California consumer protection fund and $68,394 in investigation costs.
Investors shrugged at the news, which is just the latest hit against the company. Shares rose $0.24, or 0.6%, to $39.19 Wednesday. Shares have collapsed this year, losing about a third of their value, as the company’s profitability comes under pressure as it’s forced to lower prices due to greater competition.
The investigation was reached with City Attorneys of Los Angeles, Santa Monica, Calif. and San Diego.
Whole Foods, in a statement, says: “Whole Foods Market takes our obligations to our customers very seriously and we strive to ensure accuracy and transparency in everything we do. We cooperated with the city attorneys throughout the process, and based on a review of our own records and a sampling of inspection reports from various city and county inspectors throughout California, our pricing on weighed and measured items was accurate ninety-eight percent of the time. While we realize that human error is always possible, we will continue to refine and implement additional processes to minimize such errors going forward.”