Arkansas-based chain Walmart (WMT, Financial) is again under the strict scrutiny of the media as it is being accused of false advertising claims and overcharging customers in New York for the products of Coca Cola (KO, Financial). The New York attorney general has asked the retail giant to pay a penalty of $66,000. Let’s take a look at what’s going on.
What’s going on?
On Father’s Day the retail chain giant charged $3.50 for 12-packs of soft drinks instead of $3, as advertised during the promotions. When one of the buyers questioned the employees about the hike in price, one of the employees responded by saying that the hike was due to "sugar tax." In New York there is no such thing as "sugar tax." When another buyer brought the error to the notice of a staff member, he completely denied it by saying that the advertisement was published in a national newspaper and was not applicable in New York.
This action was programmed by the executives at Walmart because, if it was an error when it was brought to the notice of the staff, they should have immediately looked into the matter and stopped it, but they kept on doing it. Meanwhile whatever extra income they were making was going into the pocket of the retail outlet. When Walmart was questioned about it, they denied it and lied over the matter. Walmart sold nearly 66,000 12-packs of Coca-Cola products which means nearly 800,000 colas.
Now what?
The attorney general of New York has declared that Walmart will have to pay $66,000 as penalty and settlement cost. No injustice with ordinary people will be tolerated in New York; the rich and powerful cannot dominate anyone. All are equal in the eyes of the judiciary.
Walmart has been facing some issues or the other in most of its outlets globally. In June, it faced some labor problems in China. In January again, in China it had to recall donkey meat as fox DNA was found in it. They even faced some bribery allegation and lobbying charges in Mexico, India, China and Brazil. Walmart was even accused of violating India’s Foreign Exchange Management Act with its plans of setting up stores in India. It had planned to open eight stores in a year but could not open even one.
The reputation of Walmart has gone down, and its earnings, too, have gone down. It is always under media scrutiny and is gaining limelight by the some incident or the other. In March itself it had faced the same criticism and did not stop it until the attorney general stepped into the matter.
Final words
Walmart is one of the largest retailers with 11,000 outlets across the globe. In New York itself it has 117 stores. An employee of the company has apologized to the attorney general regarding the incident that happened and even said that they strive to deliver quality products that are needed daily at cheap price. Charging $0.50 wasn’t a big deal. But the price that was circulated in newspapers turned into false advertisement. This incident has definitely brought down the brand image that Walmart had created over the decades and might leave a long lasting scar in its reputation.
