Australian supermarket giants face class action over ‘dodgy’ discounts

(Originally posted on : Invezz )

A shadow of doubt has fallen over Australia’s two largest supermarket chains, Woolworths and Coles, as they face a class-action lawsuit alleging misleading discount practices.

Amidst a cost-of-living crisis that has gripped the nation, the legal challenge adds further pressure to a sector already under intense scrutiny.

The lawsuit, launched by consumer protection law firm Gerard Malouf & Partners, claims the retailers advertised deceptive discounts on everyday products, potentially misleading millions of shoppers.

The firm argues that Coles and Woolworths inflated prices before applying discounts, resulting in final prices that were equal to or even higher than the original, pre-inflated cost.

The price of deception: potential refunds for Australian consumers

The firm estimates that the average customer who purchased such products from Coles between February 2022 and May 2023, and from Woolworths between September 2021 and May 2023, could be entitled to a refund of up to A$1300 ($840.25).

The class action aims to recoup the difference between the allegedly illusory discounted price and the true, undiscounted price.

A separate battle: distinguishing the class action from ACCC lawsuits

This legal action follows separate lawsuits filed by the Australian Competition and Consumer Commission (ACCC), the consumer watchdog, against both supermarket giants for similar misleading discount practices on hundreds of products.

However, the class action by Gerard Malouf & Partners distinguishes itself by specifically seeking refunds for affected consumers.

Safeguarding consumer rights: law firm’s chairman weighs in

“We believe this class action is an essential move toward safeguarding consumer rights and demanding transparency in retail practices Australia-wide,” stated Gerard Malouf, chairman of the law firm.

This statement underscores the broader implications of the lawsuit, potentially setting a precedent for consumer protection in the Australian retail landscape.

Market reaction: Woolies dips, Coles edges up

Following the announcement of the class action, Woolworths’ shares closed 0.4% lower on Thursday, while Coles experienced a marginal gain of 0.2%.

The market’s response suggests a cautious wait-and-see approach as the legal proceedings unfold.

Coles and Woolworths did not immediately respond to Reuters’ request for comments.

The ongoing cost-of-living crisis, coupled with rising interest rates, housing costs, and energy bills, has further intensified scrutiny on supermarket pricing practices.

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