Angry Whole Foods Forced To Pay $500k Fine To Stop Pricing Investigation

The health food giant, Whole Foods, agreed today to pay a negotiated fine of $500k to stop an ongoing labeling and pricing investigation.

The agreement between New York City’s Department of Consumer Affairs and Whole Foods will put an end to the DCA’s investigation that began last June, reports Business Insider.

DCA Commissioner Julie Menin issued a press release on June 25, 2015, announcing the investigation on the NYC Consumer Affairs website. In a sting operation, the DCA had found that Whole Foods New York stores routinely overstated the weight of prepackaged food, resulting in the customers being overcharged the majority of the time. Eighty types of products were tested, and all of them had packages with mislabeled weights. In addition, almost 90 percent of the packages had failed to meet the federal standard for how much the labeled weight can deviate from the actual weight.

“The overcharges ranged from $0.80 for a package of pecan panko to $14.84 for a package of coconut shrimp.”

“It is unacceptable that New Yorkers shopping for a summer BBQ or who grab something to eat from the self-service aisles at New York City’s Whole Foods stores have a good chance of being overcharged,” said Menin in the statement. “Our inspectors tell me this is the worst case of mislabeling they have seen in their careers, which DCA and New Yorkers will not tolerate.”

Bloomberg reports that the investigation included other grocery stores, as well, with more than 90 of the 120 stores having overcharging violations.

Menin issued a statement regarding the agreement today on the NYC Consumer Affairs website.

“… we are happy to have reached an agreement with Whole Foods that will help to ensure New Yorkers are better protected from overcharging. Whether it’s a bodega in the Bronx or a national grocery store in Manhattan, we believe every business needs to treat its customers fairly and, with this agreement, we hope Whole Foods will deliver on its promise to its customers to correct their mistakes. DCA will also continue its vigilance in making sure New Yorkers are protected every time they check out at the grocery.”

The DCA originally asked for a fine of $1.5 million, which Whole Foods refused to consider. They eventually settled at $500k, plus Whole Foods has to conduct in-store audits and expand its policies to help prevent incorrect pricing and mislabeling. For example, employees are now required to actually weigh each package individually, rather than just estimating the weight.

Whole Foods was not happy with the way DCA announced the settlement, however. They issued a statement on their website,

“Whole Foods Market worked closely with the New York City Department of Consumer Affairs (DCA) over the last several months to reach an agreement that is in the best interest of the people of the City of New York and our stakeholders. Unfortunately the DCA has misrepresented this agreement.”

Whole Foods emphasized that the DCA discovered no intent to deceive or to intentionally overcharge customers.

In addition, the company states that it already had pre-existing programs and procedures in place that went “above and beyond the DCA’s requirements.” This includes a full refund guarantee for any incorrectly priced item.

“… we agreed to $500,000 in order to put this issue behind us so that we can continue to focus our attention on providing our New York City customers with the highest level of quality and service.”

Paying fines for pricing and labeling violations is apparently not a new thing for the company. CNN reports that last year the Whole Foods agreed to pay almost $800k to the cities of San Diego, Santa Monica, and Los Angeles after an investigation by the state of California found widespread violations.

[Photo by Justin Sullivan/Getty Images]