Court of Appeals Reopens Deceptive Shelf Pricing Lawsuit Against Walmart

Salad dressings are displayed at a Walmart store in Secaucus, N.J., on Nov. 11, 2015. Lucas Jackson/Reuters

An appellate court on July 3, reversed a lower court’s dismissal of a lawsuit alleging deceptive pricing practices by retailer Walmart.

The case, brought by plaintiff Yoram Kahn on behalf of himself and similarly situated consumers, claims that Walmart has been engaging in unfair and deceptive pricing practices that mislead consumers at the point of sale.

Specifically, Mr. Kahn, an Ohio resident, alleged that the prices on the store shelves did not match the prices shoppers were charged at the register. Walmart argued that giving consumers receipts showing the prices they actually paid is sufficient.

“The district court dismissed the case on the pleadings and denied leave to amend the complaint,” Judge David Hamilton wrote in the opinion. “We reverse because the complaint states some viable claims. We reject the theory that providing a customer with a receipt after payment stating the actual price charged is sufficient, at least as a matter of law, to dispel any potential deception or unfairness caused by an inaccurate shelf price.”

The case will now go back to the U.S. District Court for the Northern District of Illinois.

Small Discrepancies Add Up

Mr. Kahn shopped at a Walmart store in Niles, Illinois, on August 2, 2022. After purchasing 15 items, he said he discovered discrepancies between the shelf prices and the prices charged at the cash register for six of the items, according to court documents.

The discrepancies amounted to nearly seven percent of his total bill, a small amount for an individual but potentially significant given Walmart’s volume of transactions.

Mr. Kahn’s investigation revealed similar issues at other Walmart locations in Illinois, Florida, Indiana, Maryland, New Jersey, and New York, according to court records.

“Plaintiff Yoram Kahn alleges that the nation’s largest retailer—defendant Walmart Inc.—takes advantage of consumers in Illinois and nationwide with deceptive and unfair pricing practices,” the July 3 opinion noted in reference to the original case. “The individual discrepancies are small but according to plaintiff add up to hundreds of millions of dollars each year. Kahn alleges that Walmart is aware of these discrepancies between shelf prices and register prices and that its unfair and deceptive pricing practices are pervasive and continuous.”

Mr. Kahn alleged that Walmart’s discrepancies also violated the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA), the Illinois Uniform Deceptive Trade Practices Act (UDTPA), and other consumer protection statutes in the state.

The lawsuit included a claim of unjust enrichment and seeks to represent a class of similarly affected consumers.

The district court originally dismissed the case in March 2023, finding that the plaintiff failed to allege a plausible claim under the state consumer protection laws because providing customers with a receipt showing the actual prices charged was sufficient to dispel any deception.

Receipt Not Sufficient

The appellate court focused on what constitutes reasonable consumer behavior under state consumer protection laws.

In his opinion, Judge Hamilton noted that his reversal was not because he agreed with the plaintiffs.

The court actually agreed with Walmart’s argument that the consumers had not alleged a plausible likelihood of future injury that is needed for injunctive relief under the UDTPA. However, Judge Hamilton is giving the plaintiff “an opportunity to amend his complaint if he believes he can cure that problem.”

The court further noted that expecting consumers to track and compare all shelf prices against their receipts was unreasonable.

The lower court had found that although “reasonable consumers” would be misled by Walmart’s price discrepancies, “once those consumers were given receipts with the actual prices charged, no reasonable consumer would remain deceived.”

“First, Walmart provides receipts to its customers only after their transactions have concluded,” the opinion stated. “Corrective information provided to the consumer after the transaction will not necessarily affect the reasonable consumer analysis.”

The appellate court acknowledged that many consumers might not have the time or means to verify every price discrepancy, especially in a busy retail environment.

Judge Hamilton emphasized that providing a receipt post-purchase does not necessarily correct the deception caused by inaccurate shelf pricing.

Furthermore, the appellate court highlighted that Walmart’s alleged pricing discrepancies could amount to a “bait-and-switch” scheme, where consumers are lured in by lower advertised prices only to be charged more at the register. The court found that such practices could be deceptive even if the discrepancy is discovered before the completion of the transaction.

The Epoch Times has reached out to Walmart Inc. for a response to the lawsuit but did not hear back before publication time.