A Whole Foods shareholder is suing the company after an investigation found that several stores were overcharging customers for food.
In the lawsuit, shareholder Yochanan Markman accuses Whole Foods of securities fraud, saying the company knowingly overstated the weight of pre-packaged products, which led to negative press that drove down the company’s share price, Reuters reports.
Whole Foods told Reuters the lawsuit is “baseless and without merit.” We’ve reached out to the company for comment.
Whole Foods executives have said the overcharges, which were discovered during a New York City government investigation, were unintentional.
The investigation revealed that several stores were mislabeling packaged foods and selling them for more than they were worth.
But Whole Foods co-CEO John Mackey said he didn’t think the problem of overcharging was specific to Whole Foods.
“We don’t think our track record is any different from any other supermarket,” Mackey said during an earnings call. “We don’t know why Whole Foods was singled out for this attention …We don’t know why the media went wild with this.”
In the investigation, inspectors weighed 80 items from eight Whole Foods stores and found inaccurate labelling on every item, according to the city’s Department of Consumer Affairs.
For example, inspectors weighed eight packages of chicken tenders, which were priced at $US9.99 per pound. Consumers who purchased these packages would have been overcharged by about $US4.13 on average, according to a DCA release. One package was overpriced by $US4.85.
Mackey and co-CEO Walter Robb published an apology video in response to media coverage of the investigation.
“Straight up, we made some mistakes, and we want to own that,” Robb said in the two-minute video apology.
The executives said the overcharges were unintentional and mainly occurred with packaged fresh foods such as sandwiches and juices.
“It’s understandable sometimes that mistakes are made,” Robb said. “They are inadvertent. They do happen because its a hands-on approach to bringing you fresh food.”
Mackey said on the call Wednesday that the company was already taking steps to fix the problem.
“We’ve done our own auditing, we’ve put in procedures so we can perhaps be perfect,” he said. “If you look at Whole Foods’ record, these are inadvertent errors.”
Executives said last month that Whole Foods planned to retrain employees in New York stores and around the country to address the problem.
The company will also refund customers for the full price of any product that has labelling errors.
“We want to be perfect in this area,” Mackey said. “We don’t want there to ever be any mistakes.”
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