Walmart faked 'sugar tax' on NY soda sales; fined $66K
Walmart will pay $66,000 to settle a false advertising case in New York after consumers were falsely told the state had a 'sugar tax' on Coca-Cola. Investigators say Walmart sold 66,000 12-packs of Coca-Cola at an inflated price.
| Albany, NY
New York's attorney general has settled a false advertising investigation at Walmart, saying some store personnel were citing a nonexistent "sugar tax" on soda.
The attorney general's office says the retailer launched a national sale in June advertising Coca-Cola 12-packs for $3, but consumers at 117Wal-Mart stores in New York were routinely charged $3.50.
Investigators say some consumers who complained were falsely told the state has a "sugar tax." They say the markup of more than 16 percent violated state laws.
They say Wal-Mart ran a similar sale in March, and 66,000 12-packs of Coca-Cola have been sold in New York at an inflated price.
The settlement requires Wal-Mart to pay over $66,000 and improve internal reporting.
An explanation from the New York Attorney General's office reads:
In June 2014, Wal-Mart launched a Father’s Day sale, including advertising 12-packs of Coca-Cola products for $3.00. However, when consumers in New York State attempted to purchase the sale items, customers were routinely charged $3.50. According to the investigation by the Attorney General’s Office, in one Buffalo-area Wal-Mart store a consumer brought the error to the attention of staff and was told that the newspaper circular was a national ad and that it did not apply in New York. When consumers complained about being charged more than the advertised price, Wal-Mart staff falsely told them that New York has a ‘Sugar Tax.’ The investigation concluded that the markup of over 16% above the advertised price violates New York State’s General Business Law 349 and 350.
“There has to be one set of rules for everyone, no matter how rich or how powerful, and that is why our office must ensure that even the largest corporations cannot advertise one price and then charge a higher one to New Yorkers,” said Attorney General Schneiderman. “Whether it’s securing the largest financial settlements in U.S. history to address misconduct that crashed the economy, or settling cases with the nation’s largest retailers, this office will continue to stand on the side of ordinary New Yorkers.”
During the course of the investigation by Attorney General Schneiderman’s office, consumers were routinely overcharged in stores across the state. It was determined that cash registers were programmed to not recognize the advertised sale price. On June 12, 2014, the Attorney General’s Office requested that Wal-Mart immediately adjust prices to the amount advertised. Wal-Mart took corrective action after approached by the Attorney General’s Office.
The investigation also determined that Wal-Mart ran a similar sale in March that resulted in the company failing to honor the advertised price for Coca-Cola soft drinks in New York. Despite documented complaints from consumers about the price discrepancy, the company failed to adjust prices until requested by the Attorney General’s Office. In total, Wal-Mart sold New Yorkers 66,000 12-packs of Coca-Cola at an inflated price.
A company spokesman says they're enhancing procedures to ensure proper promotional pricing.
This is Wal-Mart's second personnel problem to surface this week. On Monday, Wal-Mart Stores Inc's Chief Spokesman David Tovar resigned after the company allegedly found that he had lied about his academic record in his resume, Bloomberg reported, citing a person familiar with the matter.
While conducting a due-diligence screening, Wal-Mart discovered that Tovar had lied about receiving a bachelor of arts degree from the University of Delaware in 1996, the report said.
An academic-records official from the University of Delaware confirmed to Bloomberg that Tovar never received the diploma.
Tovar, who announced his resignation last week, could not be reached by phone and did not respond to an email seeking comment.