Subscribe for 99¢
Koster sues Walgreens for deceptive pricing

Missouri Attorney General Chris Koster shows reporters at a press conference this morning the difference between the advertised price on the shelf and the price his investigators were charged at the register for those items.

After settling similar cases in other states, Walgreen Co. is now coming under fire in Missouri for allegedly charging customers higher prices at the register than the prices displayed on store shelves.

On Tuesday, Missouri Attorney General Chris Koster filed a civil lawsuit against the Deerfield, Ill.-based drugstore chain for engaging in what he called a pattern of false and misleading advertising and pricing schemes.

During a two-month investigation by his office, Koster said staff members visited eight Walgreens stores across the state, including two in the St. Louis region, and found that they were overcharged on about 20 percent of the items they purchased — or on 43 items out of 205 products.

“This level of consumer deception is inexcusable from a corporation as sophisticated as Walgreens,” he said at news conference in downtown St. Louis. “In fact, it’s appalling.”

Walgreen, the nation’s largest drugstore chain, said in a statement that it won’t comment on Koster’s complaint. But the company said it was disappointed and disagreed with his comments.

“However, we are prepared to have a constructive dialogue about the issues he raised and address any appropriate concerns,” the company said.

Koster singled out a number of problems at Walgreens stores, including shelf tags that displayed sales that had expired, items in clearance bins that were rung up at full price, and products that had advertised discounts for members of the retailer’s reward club that were not reflected at the register.

And, he added, in some cases there were multiple price tags or signs posted next to an item that made it nearly impossible for consumers to discern the true price.

“My concern is this is not sloppiness — this is a business practice that is consciously intending to steal from sick people that go into Walgreens, from old people that go into Walgreens ...,” Koster said.

The attorney general cited some specific examples, too. For example, an investigator was charged $8.99 for a four-pack of Muscle Milk, even though he had a rewards card and so should have been given the discounted rate of $6.99. A staff member was also charged the regular price for a bag of double-stuffed Oreos — $4.19 — instead of being given the sale price advertised on the shelf for $3.29 each or 2 for $6.

Keeping track of pricing, while it can be complicated, is something that most retailers have learned to finesse over the years, because it’s such an integral part of their business, said Jim Hertel, managing partner of consulting firm Willard Bishop.

“Promotions are a reality of retailers’ lives — they just are,” he said. “It’s not like they were invented two weeks ago.”

Supermarkets deal with something in the range of 5,000 to 7,000 price changes a week, he said. And retailers typically plan for these promotions at least nine weeks in advance so they have enough time to prepare.

So the problems that Koster pointed out suggest an operational issue at Walgreen, Hertel said.

Koster, who is planning to run for governor in 2016, said he launched this investigation after receiving complaints from consumers about Walgreen’s misleading prices. And he noted that the same issue has come up in other states such as California and Wisconsin.

In January, Walgreen agreed to pay more than $1.4 million after four San Francisco Bay Area counties sued over price discrepancies. It also began offering a scanner price guarantee program in California in which consumers are given an item for free or a $5 merchandise card if the price that is rung up at the checkout line is more than the lowest advertised price.

And in March, the company paid nearly $30,000 to settle claims that it scanned inaccurate prices and didn’t post refund notices at stores in Wisconsin. In that case, a state office said it found 121 inaccurately priced products at 51 Walgreens stores during a two-day inspection.

“I expect this will not be the last state to take on Walgreens,” Koster said.

The attorney general added that his office made a similar check on pricing at another big box retailer, which he did not name. But he did not find nearly as many problems that would warrant bringing forth an action like it did in the case of Walgreen, he said.

The lawsuit was filed in Jackson County Circuit Court.

In the meantime, Koster advised consumers to double and triple check their receipts when shopping at Walgreens.

Walgreen has recently been criticized for other related practices. A union-backed advocacy group called Change to Win released a report in May highlighting various problems at Walgreens stores in St. Louis and three other cities.

It found that many advertised sale items were out of stock and that there was at least one mislabeled promotion in most stores they visited.

Business Briefing e-newsletter

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.