Walmart Faces Class Action Alleging ‘Bait-and-Switch’ Pricing Practices

A federal appeals court has ruled that Walmart will be required to face a class-action lawsuit alleging that it charges consumers higher prices at the register than advertised on the shelf.

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Yoram Kahn first filed the lawsuit in 2022, alleging that “Walmart’s shelf pricing frequently misrepresents the prices consumers are charged at the point of sale. As a result, consumers fall victim to a classic ‘bait and switch,’ and unknowingly overpay Walmart a higher price for the falsely advertised merchandise at checkout.”

But in 2023, the Illinois district court where Kahn filed the lawsuit decided it would not proceed after the big-box retailer filed a successful motion to dismiss.

The appeals court’s decision on July 3 overturns that ruling. Now, Walmart will have to defend itself against the allegation that it charges consumers on average 5 percent to 10 percent more at the register than the prices marked on store shelves.

In the complaint, Kahn stated that he purchased a variety of grocery items that had been marked up from their on-shelf price tags. He alleged that those pricing issues were not isolated to Illinois, but that they “extend from coast to coast.” He noted price discrepancies in stores in Florida, Indiana, Maryland, New York and New Jersey, among other states.

The complaint also stated that, in years past, Walmart was investigated or fined by various states—including California and North Carolina—because of its pricing practices. Kahn said those investigations have done little to prevent Walmart from continuing with the status quo, noting that government efforts have “been a game of whack-a-mole for local agencies because even when Walmart is fined, the fines are a drop in the bucket for the $500 billion retailer and dwarf the hundreds of millions of dollars Walmart profits each year from selling overcharged goods.”

Kahn has proposed a nationwide class action, which would include any consumer affected by Walmart’s purported deceptive pricing practices.

The district court judge that dismissed the original case at Walmart’s request did so in part because she said Kahn failed to provide enough evidence to show deception on the retailer’s part. If Walmart had refused to provide a receipt to a customer, the story might have been different. But providing the receipt to a consumer enables that consumer to confirm the accuracy of Walmart’s pricing claims on shelf, just as Kahn did, she said.

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But, as the appeals court judge said in her ruling, “Who does that?”

The judge pointed to a number of considerations that could prevent customers from keeping track of shelf prices and comparing them to what they’re charged at the register: lack of smartphone to capture images of shelf prices; children to keep track of in a store; not wanting to hold up long checkout lines and more.

She went on to say, “Reasonable consumer behavior does not require shoppers to audit their transactions and to overcome those additional hurdles just to ensure that they receive merchandise at the advertised shelf prices.”

As a result of the judge’s decision, a court will now be required to hear consumers’ arguments on deception and unfair practices.

A Walmart spokesperson said the company will continue to deliver on its “Save money, live better” mantra.

“We’ll always work to provide our customers everyday low prices they can count on. We are confident in the evidence and look forward to arguing our case,” the spokesperson said.

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