Whole Foods has overcharged customers since 2010, NYC probe says

New York City inspectors have found many examples of the grocery chain charging more for a variety of products over the last five years. In addition to overstating the weight on prepackaged goods, Whole Foods overcharged at scanning stations and added unnecessary tax to items, investigators say. 

Julie Jacobson/AP
Pedestrians and motorists pass in front of a Whole Foods Market store in Union Square, Wednesday, June 24, 2015, in New York. New York City's consumer chief said Wednesday that Whole Foods supermarkets have been routinely overcharging customers by overstating the weight of prepackaged meat, dairy and baked goods.

There may be another reason Whole Foods has been nicknamed "Whole Paycheck." The natural foods grocer has routinely overcharged customers in New York City locations by overstating the weight on prepackaged items, a pattern New York inspectors are calling "the worst case of overcharges that they've ever seen."

The investigation, which has tracked eight of the nine New York Whole Foods locations since 2010, found multiple violations. In addition to overstating the weight on prepackaged goods like meat, dairy, and baked goods, Whole Foods overcharged at scanning stations and added tax to items that shouldn't be taxed, according to the city's investigation.

"These overcharges are incredibly troubling," Department of Consumer Affairs (DCA) Commissioner Julie Menin told The Associated Press (AP), adding that the problems were pervasive and continued even after Whole Foods was informed of the investigation.

In statements, Whole Foods said "We disagree with the DCA's overreaching allegations," and that it "never intentionally used deceptive practices to incorrectly charge customers."

The news is a hit to the natural foods chain, which is trying to fight its "whole paycheck" reputation by rolling out a lower-prices campaign and announcing a new chain of lower-priced stores aimed at Millennial shoppers. The news also comes as Whole Foods, which has 422 stores in North America and Britain, has faced slumping sales in recent quarters due to competition from mainstream rivals offering natural and organic foods, often at lower prices.

News of the alleged overpricing in New York stores may further damage the grocer's expensive image. The investigation tested 80 different types of prepackaged products and found mislabeled weights for every item tested, with overcharges ranging from 80 cents for a package of pecan panko, a type of crispy breading, to a $14.84 markup on coconut shrimp. A package of chicken tenders was overpriced by $4.85, and a vegetable platter by $6.15, the DCA said.

The investigation also found that the mislabeling sometimes worked in customers' favor, with the store undercharging for some items.

The city's Whole Foods stores have received more than 800 violations during 107 separate inspections since 2010, totaling more than $58,000 in fines, a Daily News analysis of data obtained via a Freedom of Information Law request shows.

Whole Foods isn't the only grocer the DCA cited for overpricing violations, though it was the most egregious. The agency investigated 120 grocery stores across the city; 77 percent were cited for violations.

It's also not the first time Whole Foods has been cited. Last year, the chain paid $800,000 in penalties after an investigation in several southern California stores found similar overcharging violations. It's not yet clear if Whole Foods has been overcharging customers at locations across the country.

And while an unidentified Whole Foods employee allegedly told a city inspector that prices were intentionally mislabeled and were ordered by corporate executives, according to the Daily News' report, a food industry representative told the newspaper Whole Foods may not be to blame.

Jay Peltz, general counsel and vice president of government relations for the Food Industry Alliance of New York, suggested, "If a product is delivered to a store pre-packed and pre-sealed and pre-labeled the retailer does not have control over the packaging and weighting. It's not the retailer — it's the manufacturer that packed the product."

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