Law firm announces class action investigation into Coles, Woolworths over alleged misleading discount claims
Coles and Woolworths are facing a new class action headache over allegations they promoted specially-marked products with false discounts.
A class action investigation has been launched against Coles and Woolworths over allegations the supermarket giants promoted specially-marked products with false discounts, when said price reductions were either misleading or “non-existent”.
Gerard Malouf & Partners announced the investigation on Friday, topping off a month of legal woes for the Aussie retailers after the consumer watchdog’s bombshell legal move in late September.
In a statement, GMP Law said their claim asserts the advertised price reductions on products sold by Coles and Woolworths were either misleading or non-existent, potentially “deceiving consumers about the true value of these products”.
“GMP Law is committed to holding these retailers accountable and will be seeking refunds for affected consumers,” GMP law chair Gerard Malouf said.
“The proposed legal action aims to recover the price differential between the alleged illusory discounted pricing and the original, undiscounted price.”
GMP Law is currently seeking lead applicants for the class action - specifically those who are members of the rewards programs run by Coles and Woolworths.
Mr Malouf said consumers had the right to receive honest and transparent information about the products they purchase.
“This investigation is an important step towards protecting those rights and ensuring that businesses adhere to fair trading practices,” he said.
The move follows the Australian Competition & Consumer Commission (ACCC) announcing legal action against both grocery giants over breaches in Australian Consumer Law.
The watchdog alleges they both misled consumers through discount pricing claims on hundreds of common products between February 2022 and May 2023.
Part of this allegedly involved Coles and Woolworths hiking prices by at least 15 per cent for brief periods, before placing promotional discounts with higher prices than before the hike.
The ACCC alleges Woolworths did this for 266 products in its “Prices Dropped” promotion over a period of 20 months.
Coles is alleged to have done this for 245 products in its “Down Down” promotion across 15 months.
Woolworths has said it is “carefully” reviewing the claims made by the ACCC, reiterating it was committed to offering ways for customers to save at the checkout.
In a statement, Woolworths Group said cost-of-living pressures remain a key issue for millions of shoppers.
“Our customers are telling us they want us to work even harder to deliver meaningful value to them and it’s important they can trust the value they see when shopping our stores,” Woolworths Group chief executive Amanda Bardwell said.
“Our Prices Dropped program was introduced to provide our customers with great everyday value on their favourite products.”
Coles Group has been contacted for comment.
Earlier, in response to the ACCC’s legal action, Coles Group said the allegations relate to a period of “significant cost inflation” where the retailer was receiving a large number of cost price increases from suppliers, in addition to rising costs.
The company said this led to an increase in the retail price of many products.
“Coles sought to strike an appropriate balance between managing the impact of cost price increases on retail prices and offering value to customers through the recommencement of promotional activity as soon as possible, after the establishment of the new non-promotional price,” a spokeswoman said.
Coles Group said it would vigorously defend the proceedings.
Since the announcement of the legal action, the federal government has given the ACCC an extra $30m to assist with the probe of supermarkets, including cracking down on dodgy pricing practices.
The new funding is aimed at bolstering the ACCC’s ability to proactively search for misconduct and investigate supermarkets’ reasonings for pushing up prices.
Federal Treasurer Jim Chalmers will also spearhead talks with state and territory governments to reform planning and zoning regulations in a bid to prevent land banking and create more spaces for others in the sector.
Mr Chalmers said the moves would “help to make pricing fair, boost competition and make sure that there are significant consequences for supermarkets who do the wrong thing.”
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