Senator Elizabeth Warren and Congressman Adam Schiff have called on the FTC and the Department of Agriculture to investigate Albertsons and other large grocery chains for potential unfair pricing.
This follows a recent $4 million settlement in California, where Albertsons was accused of overcharging customers by raising prices above advertised amounts and including packaging weight in product costs.
Warren and Schiff are concerned that these pricing practices harm all U.S. customers, especially in low-income areas. They also worry that the proposed Kroger-Albertsons merger could further raise grocery prices.
Specifically, Albertsons “unlawfully charged customers prices higher than their lowest advertised or posted price” and overcharged customers by placing “inaccurate weights on the labels of their products.”
For example, while their products were supposed to be sold based on an item’s net weight, they would wrongfully overcharge customers by including the weight of the packaging in the cost, the two lawmakers said.
Agreed to a $3.9 million penalty
The company agreed to pay $3.9 million to resolve the complaint that it ripped off customers at hundreds of its Vons, Safeway and Albertsons stores in California.
“Albertsons is one of the largest food retailers in the United States, boasting over 2,200 stores across the country. This settlement covers the 589 Albertsons stores in California, but all U.S. customers should be protected from predatory pricing,” they wrote.
“To ensure that no Albertsons stores are overcharging customers for essential groceries, we urge the FTC and U.S. Department of Agriculture to investigate whether any other Albertsons stores or other major grocery chains have committed similar wrongdoing and, if necessary, hold the responsible parties accountable.”
The lawmakers' request comes as large grocery companies have doubled down on using their significant market power to hike prices for essential goods and take advantage of customers, Warren and Schiff said.
For example, Stop & Shop charged higher prices at a largely minority, working-class, urban location in Boston, Massachusetts than it did at a suburban store location, placing a significant burden on already-struggling consumers.
Grocery giant Kroger Company has adopted digital price tags in its stores, which could allow the company to surge grocery prices and exploit consumers. And the proposed $24.6 billion merger between Kroger and Albertsons is poised to further drive up grocery prices and harm grocery store workers and consumers.
Kroger responds
In a statement to ConsumerAffairs, Kroger denied that its digital price tags were used to exploit customers.
“Kroger’s business model is built on a foundation of lowering prices to attract more customers. Everything we do is designed to support this strategy, and customers are shopping more with Kroger now than ever because we are fighting inflation and providing great value, a Kroger spokesperson said. "We will build on this work through our merger with Albertsons by further lowering prices and offering more choices to customers across the country.
"To be clear, Kroger does not and has never engaged in ‘surge pricing.’ Any test of electronic shelf tags is designed to lower prices for more customers where it matters most. To suggest otherwise is not true,” the company said.
An election issue
Grocery prices were a significant issue in the recent Presidential election. Both candidates addressed the impact of rising food costs on American households.
Vice President Kamala Harris highlighted high food and housing prices, proposing a federal ban on grocery price gouging and plans to construct 3 million new housing units to alleviate costs.
Voter concerns reflected these campaign focuses. A poll indicated that over half of American voters considered lowering the cost of living a top priority for the next president.
Despite a slowdown in food inflation, grocery prices remained higher than pre-pandemic levels, keeping the issue prominent in political discourse.