Grocery Outlet boasts prices cheaper than ‘elsewhere.’ A new lawsuit says it’s misleading customers

A new lawsuit claims the bargain chain Grocery Outlet comparisons of its own prices to what shoppers would pay “elsewhere” are overstating shoppers’ savings — and may violate state law.

OCJ Law P.C., a law firm affiliated with the nonprofit Oregon Consumer Justice, filed a lawsuit Monday on behalf of three customers, calling the company’s marketing practices “deceptive” and saying they create an “illusion of significant savings” that shatters when compared to nearby competitor stores.

The lawsuit, filed in Multnomah County Circuit Court, names Oregon residents Schearon Stewart, John Franz and Roger Sullivan as plaintiffs. The lawsuit aims to be certified as a class action brought on behalf of all Oregon residents who have shopped at Grocery Outlet in the past year.

Grocery Outlet Inc., headquartered in California, oversees a network for individually owned franchise stores. The lawsuit names it as a defendant as well as dozens of operators of Grocery Outlet stores in Oregon.

Jagjit Nagra, executive director of Oregon Consumer Justice, said in a written statement that receipts collected by the nonprofit reveal “egregious” exaggerations by the grocery chain.

“This class action is about doing right by consumers impacted by Grocery Outlet,” he wrote, “and holding the company accountable for their unethical and duplicitous pricing scheme that shuts down consumer choice.”

Grocery Outlet did not immediately respond to an email requesting comment.

Grocery Outlet

, which operates hundreds of independently owned stores nationwide and

more than 60

in Oregon, keeps prices low by buying items in bulk at closeout sales, according to

its website

.

The lawsuit claims those low prices are overstated.

According to the court filing, Grocery Outlet’s “elsewhere” price comparisons are misleading or inaccurate, and that they violate Oregon law.

Oregon’s

Trade Practices Act

sets standards for sellers that use reference prices in their advertising, requiring them to

clearly identify the origin

or source of price comparisons. Grocery Outlet only vaguely refers to prices “elsewhere” without listing specific competitor stores.

Grocery chain WinCo, for instance, uses similar

price comparison tactics

, but it lists the specific competitor stores prices are being compared with.

The lawsuit leans on grocery trips made by plaintiffs Stewart, Franz and Sullivan in May, during which the complaint alleges “elsewhere” prices didn’t stand up to scrutiny.

For one, Grocery Outlet listed “elsewhere” price comparisons for items not sold anywhere else in the state, the lawsuit alleged. The complaint claims comparison prices must come from outlets in the same

“geographic market area.”

Comparison prices for items sold at nearby competitor stores were “fictitiously overstated,” according to the filing.

Oat milk sold for $3.19 at Grocery Outlet was said to cost $4.99 “elsewhere” — but the same milk was found for only $1.99 at Fred Meyer. A $5.99 DiGiorno frozen pizza listed an “elsewhere” price of $8.99, but it again cost only $3.99 at Fred Meyer.

Franz’s Grocery Outlet receipt listed savings of $36.50. At Fred Meyer, he actually would have paid $1 less, according to the filing.

The lawsuit estimated more than 100,000 consumers may be eligible for the class and that the exact number could be determined based on Grocery Outlet transaction records.

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—Veronica Nocera covers retail and recalls news for The Oregonian/OregonLive. Is a business in your area opening or closing? Reach Veronica at


vnocera@oregonian.com


.

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