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November 20, 2012 / Steven Soliman

Rite Aid Forced to Pay For False Advertising

The Santa Clara County City Attorney’s Consumer Protection Unit, together with prosecutors from other California counties including San Diego, recently filed suit against Rite Aid Corporation and its California subsidiary, ThriftyPayLess Inc.  for false advertising.

According to the complaint, Rite Aid engaged in false and deceptive advertising in connection with its +Up Rewards program and Wellness+ cards, and had improper policies regarding gift cards. Specifically, Rite Aids ads stated “It’s like paying…” or “It’s like getting it for…,” conveyed to consumers that they would be paying the stated price for store items purchased using their Wellness cards when, in actuality, the item had to be purchased at a higher price and a coupon printed on their receipt only allowed them savings on their next purchase. The coupon was also subject to expiration and other restrictions. Prosecutors also complained that stores refused to redeem gift cards for cash when they had a balance of less than $10, as is required by California law.

On Wednesday, October 10, 2012, a San Diego judge certified a settlement which required Rite Aid to pay $800,000 in penalties and costs to settle the lawsuit. As part of the monetary settlement, the companies also agreed to make in-store changes, such as instituting a new system at their credit card terminals which will prompt customers when their gift card amounts are below $10 and will ask them if they would like to redeem the value for cash. Also, the companies agreed to clearly display any limitations and conditions for customers to purchase store items for the price that it is advertised for. San Diego City Attorney Jan Goldsmith explained, “This enforcement action is important to our citizens. The law requires that advertising must be clear to that consumers know what they are paying for an item before it’s purchased. And because of this lawsuit, Rite Aid now has a simple procedure in place to redeem gift cards with balances less than $10 for cash.”

Have you been the victim of false advertising?  If so, call Khorrami, LLP for a confidential consultation.

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