A statewide investigation of pricing irregularities by Whole Foods Market, including at its Palo Alto store, has resulted in an $800,000 court settlement in penalties and investigative costs, according to the Santa Monica District Attorney's Office, which led the investigation.
The City of Santa Monica launched the year-long investigation after the Los Angeles County Department of Weights and Measures reported pricing violations. Consumers were paying for the weight of the packaging as well as the food they purchased when products were weighed, along with other violations, said Adam Radinsky, head deputy city attorney for the City of Santa Monica.
The investigation spread to 10 counties, he said.
Santa Clara County Weights and Measures inspectors investigated six stores and found violations in 41 percent of inspections. The stores included Palo Alto, Los Gatos, Campbell, Los Altos, Cupertino and San Jose, said Stan Toy, deputy sealer for the county. Two out of five inspections at the Palo Alto store failed price accuracy, he said.
The investigation uncovered widespread pricing violations throughout Whole Foods' California stores. Inspectors found that Whole Foods was charging more than the advertised price for a wide variety of food items.
The problems included failing to deduct the weight of containers when ringing up charges for self-serve foods at the salad bar and hot bar; giving less weight than the amount stated on the label for packaged items sold by the pound; and selling items by the piece instead of by the pound as required by law, such as kebabs and other prepared deli foods, Radinsky said.
The statewide investigation began in 2012. Weights and measures departments in San Diego and Los Angeles found the same problems as in the Santa Monica stores. The problem was widespread and involved inconsistency, with one store having one system and another store a different system for tracking measurements, Radinsky said.
Attorneys for the three cities filed a civil consumer-protection case against the supermarket chain on behalf of the People of the State of California. Whole Foods agreed to a five-year court injunction prohibiting all of its 74 California stores from inaccurate pricing, he said.
Whole Foods Market California, Inc., which controls the northern California stores, and Mrs. Gooch's Natural Foods Markets, Inc. in southern California are bound by the judgment.
In addition to the injunction, the stores are required to:
Appoint two "state coordinators" to oversee pricing accuracy at stores throughout California
Designate an employee at every store in the state who will be responsible to ensure pricing accuracy throughout the store
Conduct random audits at each of its stores four times per year, to ensure that all prices are accurate and that proper weight is being deducted for all containers
Charge accurate prices and provide the advertised weight on all items.
The companies will also pay $798,394 in penalties and costs, including $630,000 in civil penalties, $100,000 paid to a statewide weights and measures enforcement trust fund, and $68,394 in investigative costs.
"Consumers have a right to accurate pricing and the right to pay for only what they bought," Radinsky said.
By adding the weight of containers and packaging -- especially on higher-priced, per-pound items like seafood and meats and even prepared food -- the subtracted amount of actual product can add up fast and be hidden from consumers, he said.
"If you're paying $30 a pound for exotic fish, even a handful of ice can put you back a few dollars," Radinsky said of prepackaged products.
The city attorneys' offices hope the case will serve as a wake-up call to supermarkets and other food retailers to make sure their per-pound charges are accurate, he said. Consumers should always pay close attention to their purchases and make sure the store deducts the weight of all packaging and containers, he added.
Inaccurate measurements are a common consumer problem. Some stores don't know they are supposed to deduct the weight of the container, but large companies such as Whole Foods do know the law and can get sloppy, he said.
Whole Foods spokeswoman Beth Krauss said the company takes its obligations to its customers "very seriously, and we strive to ensure accuracy and transparency in everything we do."
"We cooperated with the city attorneys throughout the process, and based on a review of our own records and a sampling of inspection reports from various city and county inspectors throughout California, our pricing on weighed and measured items was accurate 98 percent of the time. While we realize that human error is always possible, we will continue to refine and implement additional processes to minimize such errors going forward," she said in an email.
Santa Clara County performs routine inspections for scale and pricing inaccuracies, and various products are tested to determine if adequate tare weight -- the weight of the empty container -- is taken off the product, Toy said.