You’ve surely seen ads and price tags where retailers compare their prices with competitors, to show how much lower their prices are. But what if those price comparisons don’t name any competitors, so you can’t check for yourself how much, if anything, you’re really saving?
Several Oregon shoppers say Grocery Outlet’s comparison prices are vague to the point of being illegal – so they’re suing.
“Where, exactly, is ‘Elsewhere’?” the advocacy group Oregon Consumer Justice asked, in announcing the lawsuit against the discount retailer. “Elsewhere” is the label that Grocery Outlet puts on its price tags, to show how much you might normally pay if you shop somewhere other than Grocery Outlet.
But “there is no competitor in the same geographic area called ‘elsewhere,'” the lawsuit states. Instead, the “suspiciously and vaguely” labeled price tags feature “fake savings and fictitious reference prices” that the plaintiffs say violate state law.
Oregon Consumer Justice’s legal partner, OCJ Law, filed the lawsuit on behalf of shoppers Schearon Stewart, John Franz and Roger Sullivan. Each of them shopped at a Grocery Outlet store last month, and say they were victimized by the retailer’s “deceptive sales strategy.”
Sullivan, for example, purchased oat milk priced at $3.19. The shelf label claimed the price “elsewhere” was $4.99. “But that same oatmilk was for sale at Fred Meyer for $1.99,” the lawsuit states. Stewart bought a DiGiorno pizza for $5.99 with an “elsewhere” price of $8.99, even though Fred Meyer sold the same item for $3.99. And Franz bought pizza rolls for $4.99 with an “elsewhere” price of $8.99. “Those same pizza rolls were for sale at Fred Meyer for $3.49,” the lawsuit alleges.
In all cases, the name of the purported retailer selling the item at a higher price “elsewhere” was not revealed, the plaintiffs point out. And in some cases, particular items sold at Grocery Outlet “are not sold anywhere else in Oregon,” which they say makes the “elsewhere” price irrelevant, if not fictional.
According to Oregon state law, the shoppers argue, a reference price must be a price at which an identifiable competitor has recently sold the same item. “Fictitious ‘elsewhere’ prices that do not identify the competitor which purportedly sells at that ‘elsewhere’ price makes meaningful price comparison impossible and also minimizes Defendants’ exposure for their illegal scheme,” the lawsuit states. “The prices are either overstated, or worse, there is no other competitor selling that item at all.”
The issue extends beyond what the three shoppers purchased, they say, as “violations are rampant within the stores.” To name one example, Tide Pods priced at $12.99 were said to be available “elsewhere” for $18.99. But “a survey of the grocery stores in the same geographic area shows the actual prices of that same product never approached $18.99,” the lawsuit states. “Instead, at the nearest competitors it was priced for $12.99 (Fred Meyer) and $12.97 (Walmart).”
The shoppers’ receipts tally up how much they’re said to have saved by not shopping “elsewhere.” Franz’s receipt claimed he saved $36.30 by shopping at Grocery Outlet. But after comparing prices with Fred Meyer, the lawsuit says he actually would have paid $1 less by shopping at that particular “elsewhere” instead.
The shoppers decry what they call “a widespread and coordinated scheme by Grocery Outlet Inc. and its affiliated Oregon operators to mislead consumers… with inflated or fabricated reference prices.” These price comparisons “created the illusion of significant savings, when in fact, consumers often paid the same or more than they would have at other local retailers.”
The lawsuit accuses Grocery Outlet of violating the state’s Unlawful Trade Practices Act, which prohibits “false or misleading price comparisons” and spells out “requirements for transparency in advertising discounts.” The plaintiffs are seeking class action status for their case, on behalf of all other Grocery Outlet shoppers in Oregon who may have been similarly affected.
At least one of the litigants already has a good track record when it comes to challenging “fictitious” discounts. Schearon Stewart was one of the plaintiffs who sued Safeway several years ago, accusing the grocery chain of raising prices on certain items featured in buy-one-get-one-free sales. Safeway ultimately agreed to settle the case, offering a payment of up to $200 to each shopper in the state who believed they were deceived into thinking they were getting a better deal than they really were.
Oregon Consumer Justice believes they have a winning case here, too. “This class action is about doing right by consumers impacted by Grocery Outlet and holding the company accountable for their unethical and duplicitous pricing scheme that shuts down consumer choice,” Oregon Consumer Justice Executive Director Jagjit Nagra said in a statement. “Pricing information should be fair, honest, and transparent, not obscured by smokescreen tactics that falsely inflate product value and place an undue burden on consumers to fact-check sales costs without enough data to do so,” the group’s announcement declared.
Grocery Outlet boasts “name brand groceries and farm fresh organic produce for 40-70% less than conventional grocery stores.” The outcome of this case could help determine whether shoppers believe that – or if they decide they’ll be better off shopping “elsewhere.”
Image source: Oregon Consumer Justice
