The Woolworths Group Ltd (ASX: WOW) share price is under the spotlight as the supermarket business faces a class action.
Class action against Woolworths shares
The company announced to the ASX that it has been notified that class action proceedings have been commenced in the Federal Court of Australia against Woolworths Group by a law firm called Gerard Malouf & Partners.
The company said this class action relates to allegations which are the subject of proceedings commenced by the Australian Competition and Consumer Commission (ACCC) against Woolworths. It said it intends to defend the class action proceedings.
What is being alleged by the law firm?
Gerard Malouf & Partners said unlike the ongoing ACCC proceedings, which focus on regulatory penalties, this class action “specifically aims to secure consumer compensation” for affected shoppers by “recovering the difference between the advertised discount prices and the actual prices charged”.
The GMP Law Chairman, Gerard Malouf said:
We estimate that the average Australian consumer could be eligible for a refund ranging between $200 and $1,300+, depending on their shopping habits and purchases at these retailers. We believe this class action is an essential move toward safeguarding consumer rights and demanding transparency in retail practices Australia-wide.
The lawsuit focuses on “alleged misleading conduct in advertising discounts on 266 supermarket products, potentially causing financial detriment to consumers”.
Gerard Malouf & Partners said that Woolworths engaged in conduct that breaches the Australian Consumer Law by making false or misleading representations about product pricing.
The law firm also said that there are claims that customers may have experienced financial loss by “paying inflated prices for products they believed were discounted.” Woolworths is also accused of “not providing genuine price reductions despite advertising products as being on special offer.”
What next?
GMP Law said it will proceed with its investigation, accumulating evidence and preparing for potential legal action against Woolworths. The firm will also closely follow the ACCC’s supermarket inquiry. The ACCC is scheduled to deliver its final report by 28 February 2025.
Final thoughts on the Woolworths share price
Woolworths is facing a lot of heat at the moment. Investors don’t seem too concerned today, with the Woolworths share price up 0.4% at the time of writing. But, it is down more than 16% since 19 September 2024.
If investors are interested in Woolworths shares, this troubled time could be an interesting point to consider the company at this lower price.
But, I’m not expecting a lot of sales growth in the foreseeable future, so there are other ASX dividend shares I’d rather buy.
