The Walmart class action lawsuit of 2024 is significant news for consumers and businesses alike. As the largest retailer in the United States faces scrutiny over ‘deceptive pricing’, the case serves as a reminder for all retailers and e-commerce owners about the importance of maintaining precise and transparent pricing practices.
Accurate and honest pricing is a key expectation of all consumers. It is so non-negotiable that most – if not all – customers do not usually think about double-checking before or after checkout, trusting the seller to keep their end of the bargain. The loss of this trust, however, can have long-term damaging effects on a retailer’s reputation and profitability.
Let’s take a closer look at what the recent Walmart class action suit pertains to and what it means for you and your business.
Walmart Lawsuit 2024: Overview
In 2022, Yoram Kahn filed a federal lawsuit against Walmart, alleging that the shelf prices for several small items he purchased at a Walmart store in Niles, Illinois, were 10-15% lower than the prices he was charged at the register.
After Kahn’s attorneys identified similar issues at Walmart stores in other states, they sought a class-action lawsuit on behalf of consumers who they believed were victims of deceptive "bait-and-switch" pricing policies.
Initially, a district court dismissed Kahn’s lawsuit, stating that the provision of the real charged prices on the receipt offered enough transparency. However, in early July 2024, the U.S. Appeals Court in Illinois allowed the lawsuit to proceed, emphasizing that the accurate receipt prices did not negate the deception unintentionally created by the inaccurate shelf prices before checkout.
How to Prevent 'Deceptive Pricing' Claims in Retail and E-commerce
The Walmart lawsuit shows the consequences of pricing discrepancies and proves the need for diligent compliance with consumer protection laws. Failure can result in significant legal and financial repercussions, including class-action lawsuits and substantial fines.
As a retailer, you should always ensure pricing transparency before charging the clients at checkout and know that even unintentional pricing errors can be considered deceptive practices under consumer protection laws. To avoid the pitfalls and maintain consumer trust, we advise implementing the following best practices:
Ensure Pricing Transparency
The obvious first recommendation is to make sure that all pricing information is readily available to customers and to communicate any errors along with the steps taken to rectify them. The three pillars of customer trust are:
- Transparent display of prices – Label prices on shelves and product pages to avoid confusion. Verify that online product listings have accurate and current pricing information.
- Clear communication of additional charges – Provide explicit information about extra costs such as shipping, taxes, or other fees. Make sure these additional charges being prominently displayed before the customer completes their purchase.
- Overt mention of active campaigns or discounts – Highlight ongoing promotions or discounts. Confirm that discounted prices are correctly applied at checkout to prevent any misunderstandings.
Adopting proper unit pricing is also key as errors in unit pricing are what got Walmart fined earlier this year, resulting in a $1.64 million settlement. With unit pricing tools, prices are shown per unit of measure (e.g., per ounce, per liter), helping customers make informed comparisons between products, especially for products sold in varying quantities or sizes.
Audit and Update Your Pricing Policies
Conduct frequent checks to ensure that shelf prices match register prices and that your pricing strategies comply with all the relevant laws. This includes:
- Regular reviews of price updates and markdowns.
- Ensuring promotional pricing is correctly applied and honored.
- Using automated systems to flag discrepancies for prompt resolution.
Opt for Price Tracking Systems
Retailers and e-commerce stores should invest in advanced pricing systems to minimize errors. These systems should include regular audits to ensure that the prices displayed online and in-store match those at checkout.
In light of the class-action lawsuit, Walmart is responding to ongoing issues with pricing accuracy by testing digital shelf labels to effectively manage product pricing. Planning to have DSLs installed in over 2,300 stores by 2026 (according to Forbes), Walmart aims to reduce the risks associated with manual pricing by achieving the following:
- Real-time price updates through a centralized system.
- Reduction of human errors through increased automation.
- Operational efficiency by minimizing time spent on manual price adjustments.
For e-commerce stores, pricing tools offer the additional benefit of easy price monitoring across multiple platforms or marketplaces and automatic updates in real time to ensure consistency across all product listings.
Perform Regular Staff Training
Your retail staff and customer service representatives should be regularly trained on current pricing policies and consumer protection laws. Make sure your training covers the importance of price accuracy and the legal ramifications of pricing errors and establish clear protocols for handling and reporting pricing errors.
For e-commerce businesses, this extends to ensuring that the technical team is proficient in managing pricing tools and systems.
Use Expert Pricing Tech to Guarantee Compliance
In the U.S., the Federal Trade Commission (FTC) enforces laws against deceptive pricing practices. Similar regulations exist worldwide, such as the Consumer Rights Act in the UK, which requires clear pricing information, and the Omnibus Directive in the EU, which demands full pricing transparency. Specific technological tools can help you ensure compliance with all these pricing and consumer laws:
- Price History tools – Allow customers to see historical pricing to boost trust and transparency (See more for Magento and Shopify).
- Price Per Unit tools – Calculate and display the PPU automatically, showing the cost per unit of measure (such as per oz or kg).
- Automated audit systems – Regularly check for pricing errors across all channels and rectify them before they impact customers.
To protect your business, consider taking up a habit of yearly consultations with legal experts to stay updated on the latest consumer protection laws and regulations.
Monitor and Respond to Customer Feedback
Encourage customers to report pricing discrepancies and ensure there is a straightforward process for addressing their concerns. For online stores, use automated systems to flag and respond to complaints about pricing discrepancies. Engage with customers to show that you value their business and are committed to fairness.
Follow these best practices to prevent and avoid the pitfalls highlighted by the Walmart lawsuit claim. Ensuring transparency, confirming accuracy, and investing in technology, customer support, and employee training – all these are key steps toward a successful and legally sound pricing strategy that helps maintain consumer trust and ensures compliance with legal standards.
Walmart Class Action Lawsuit: Takeaways
Accurate pricing practices contribute to customer loyalty, brand reputation, and reduced legal risks. Meanwhile, errors in pricing – even when unintentional – can lead to perceptions of deceit, undermining customer confidence and spurring legal action. The Walmart lawsuit reminds us of the importance of pricing transparency. Whether your business is brick-and-mortar or e-commerce, now is the time to review and enhance your pricing practices.
Any upfront investment – no matter how large – in maintaining compliant pricing policies will be lower than the costs of recovering from legal and reputational damage.
