Safeway, Inc., has agreed to settle a consumer protection case with two local district attorneys for price gouging with the sales of certain hand sanitizer brands early in the coronavirus pandemic, prosecutors announced Tuesday.
Spearheaded by the Alameda County District Attorney's Office, the investigation revealed Safeway began selling Raff Distillerie hand sanitizer and Ocean Fresh pump gel hand sanitizer after the onset of the pandemic and marked up each item more than 50% over its wholesale cost, in violation of the emergency order issued by Gov. Gavin Newsom in April to prevent price gouging, according to local prosecutors.
The settlement calls for Safeway to pay more than $140,000 in penalties and restitution to resolve the case without admitting liability. Prosecutors said the company, which had long corporate ties in Pleasanton, quickly corrected the pricing problem when called to its attention.
"The violations at issue here are serious by their very nature. Little can be more serious than a violation of a governor's emergency order during a state of emergency. The ongoing pandemic has affected the lives and personal hygiene practices of millions of people in California," said Contra Costa County DA Diana Becton, whose office was also involved in the investigation.
"Public health officials were advising constant hand-washing to prevent the spread of the virus. If soap and water was not available, hand sanitizer was recommended as the next best thing. These are the items that Safeway sold or offered for sale at 'unconscionably excessive' prices," Becton added in a statement.
"During this unprecedented crisis, my office continues to remain vigilant in ensuring that Californians are able to purchase consumer goods, particularly health-related items such as hand sanitizer, at prices that do not exceed the amount allowed by law," Alameda County DA Nancy O'Malley said in a separate statement. "Anyone who believes he or she has been subject to unlawful pricing should immediately contact my office."
Safeway representatives could not immediately be reached for comment.
The investigation began after a resident called the Contra Costa County DA's consumer fraud hotline in May to complain about suspected price gouging at a Safeway grocery store in Concord.
The ensuing investigation, conducted by the Alameda County DA's Office, determined Safeway sold Ocean Fresh pump gel hand sanitizer at $9.99 (a markup of $4 per unit, $1.01 higher than allowed under the governor's order) while Raff Distillerie hand sanitizer was sold at $5.99 (a $1.84 markup per unit, 47 cents higher than allowed), prosecutors said.
"When the pricing issue was brought to Safeway's attention, they immediately responded and corrected the prices to comport with the governor's order. The investigation did not reveal any other actionable price gouging violations by Safeway," Becton's office reported.
The settlement requires Safeway to ensure its prices comply with state law, including any emergency orders from the governor, according to prosecutors. Without admitting liability, Safeway was ordered to pay approximately $81,000 in civil penalties and costs, and $62,000 in restitution.
Safeway, Inc., which still lists company headquarters in Pleasanton, is now a subsidiary of Albertsons Companies, based in Boise, Idaho.