Consumer Protection
5:05 pm
Wed June 4, 2014

Koster Reaches Accord With Walgreens Over Mismarked Prices

Attorney General Chris Koster reached an agreement with Walgreens regarding overcharging consumers. 

Attorney General Chris Koster says the state's agreement with Walgreens will make sure the company stops overcharging consumers.
Attorney General Chris Koster says the state's agreement with Walgreens will make sure the company stops overcharging consumers.
Credit Jason Rosenbaum, St. Louis Public Radio

Koster sued the pharmacy giant last year, contending that stores around the state were charging more than the prices displayed on shelves. His office’s lawsuit stated that the company was violating the state’s consumer-protection laws by “engaging in false, misleading and deceptive advertising and pricing schemes.”

During a press conference in St. Louis, Koster announced a legal agreement requiring the suburban Chicago-based company to pay for independent price auditing for the next three years. Koster’s office would approve the independent monitoring firm, which will randomly visit 52 of Walgreens’ 208 Missouri stores every three months.

“This is basically an unprecedented degree of babysitting that is going to occur over this corporation until they get this situation solved,” Koster said.

According to Koster, each store must demonstrate “98 percent or better pricing accuracy.” That means if three items out of 100 are mismarked, that store will fail the audit. If a store fails inspection, the auditor will go back the next month and audit the store again. If it fails a second audit, the auditor will go back every month until the store achieves 98 percent pricing accuracy for three months in a row. 

“There are penalties for failing,” Koster said. “Walgreens will pay the state an escalating series of penalties each time a store fails inspection. And my attorney general’s office intends to loudly, clearly and publicly let Missourians know each time a Walgreens store fails to meet the expectations of this agreement.”

Koster said Walgreens would have to pay the state $1,500 for each store that does not pass its first inspection. The company will have to pay the state $3,000 if a store fails a second inspection and $5,000 if a store fails a third or subsequent inspection. He also said the cost for the auditing regiment will stretch into the “seven figures.”

“My hope is that the combination of audits, financial penalties and public shaming will give Walgreens executives a strong incentive to clean up their act,” he added.

In a statement to St. Louis Public Radio, Walgreens spokesman Phil Caruso said his company was “pleased to have reached an agreement with the attorney general that allows us to continue to operate within our previously established business practices. These practices are consistent with our 113-year history of acting in our customers’ best interests and ensuring their trust.”

Koster said the settlement is a better than Walgreens simply cutting a check to the state. He said that occurred in other states and didn’t end up stopping anything.

“What I think is going to fix the problem is having auditors pay random visits to these stores searching through 100 products at a time and submitting reports back to the state so we can monitor this all over Missouri,” Koster said.