Walgreens Co. has agreed to a $500,000 fine and advertising practices “reforms” as part of a settlement with the New York Attorney General’s office. The Attorney General found the national drugstore chain and subsidiary Duane Reade Inc. had regularly overcharged customers through misleading advertising. In a statement, New York Attorney General Eric T. Schneiderman said an undercover investigation by his office showed Walgreens and Duane Reade, which together operate about 500 stores in the state, would “deceptively induce” customers to purchase products through a number of misleading practices.
In addition to publishing print advertisements that would not be honored in-store, Walgreens and Duane Reade would leave incorrect price tags on shelves to make customers think an item was being sold for one price, only to be charged differently at the register, according to the Attorney General. Michael Zucker, a researcher at union strategizing firm Change to Win, said in a statement:
Walgreens has failed to provide the staffing and systems needed to accurately price its products. We’ve seen these deceptive practices in a number of other states, costing consumers and violating the public trust.
The drugstores also presented items in other misleading ways, as a “smart buy” or a “last chance” purchase for example, “thus implying that the product is available at a reduced price only for a limited time,” according to the Attorney General’s office. However, these products were often available at the reduced price for a “significant period of time” and sometimes for nearly a year. Another deceptive practice the stores used was to imply customers would be receiving an immediate cash discount on a purchase, with advertisements saying the cost was “like paying” or “like buying” even though the advertised discount would be applied only to a future purchase.
Walgreens has agreed to change its advertising practices throughout New York, in addition to the $500,000 fine. The drugstores will no longer promote any product as a “last chance” or “clearance” item if it will remain in-store for an extended time, will remove all shelf tags with expired offers or pricing within 36 hours of their expiration, will limit the stores’ use of “like buying” shelf tags, and will regularly conduct internal and external price check audits throughout all the stores. For every store that fails two consecutive external audits, Walgreens will have to pay a $2,500 penalty to the state.