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Judge Orders Rite Aid To Pay $800,000 For False Advertising

A San Diego judge today ordered Rite Aid Corp. and its California subsidiary Thrifty PayLess Inc. to pay $800,000 in penalties and costs to settle a consumer protection lawsuit that alleged false advertising and failure to redeem gift cards with balances of less than $10 for cash in Rite Aid stores.

A Rite Aid in Culver City, Calif.
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Above: A Rite Aid in Culver City, Calif.

The companies agreed to make in-store changes to resolve the case filed by the San Diego City Attorney's Consumer Protection Unit, together with prosecutors from the Santa Clara, Riverside and Ventura County District Attorney's Offices.

"This enforcement action is important to our citizens,'' said San Diego City Attorney Jan Goldsmith. "The law requires that advertising must be clear so 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.''

The complaint alleges that Rite Aid advertisements conveyed to consumers that they would pay lower prices for items purchased using the Rite Aid Wellness-plus Card. However, once at the register the customer could not purchase the item at the advertised price. Instead, the customer got a coupon printed on the end of his/her receipt for money off a future purchase that would expire and was subject to other restrictions.

The complaint alleges that Rite Aid failed to adequately inform consumers that the product could not be purchased at the advertised price. In the settlement, the companies agreed that Rite Aid will clearly display the limitations and all the conditions necessary for customers to purchase items for advertised prices.

Also as part of the settlement, Rite Aid stores will institute a new system at customer credit card terminals in which the computer will prompt consumers when gift cards are below $10, and ask if the would like to redeem the card for cash.

Superior Court Judge Ronald Prager ordered Rite Aid and Thrifty PayLess not to commit future violations, and that the companies pay $25,000 in costs and $75,000 for the California Department of Food and Agriculture, Division of Measurement Standards' price verification program.