For release on August 23, 2013
Francisca Allen, Deputy District Attorney
Consumer Fraud Unit
SAFEWAY SETTLES LAWSUIT FOR OVERCHARGING GAS REWARDS CUSTOMERS
Following a District Attorney’s investigation, Safeway has agreed to pay about $46,000 in civil penalties for a computer program glitch which negated hundreds of its gas station customers’ special discounts. Most of those affected by the faulty program were customers of a single Campbell gas station.
The problem, caught by a sharp-eyed consumer in 2011, has since been fixed. But not before more than 700 transactions were overcharged.
“It is always a good idea to carefully reconcile your store receipts with the charges on your credit card statement,’’ prosecutor Francisca Allen said. “Innocent or fraudulent, a discrepancy costs you hard-earned money.”
The issue surfaced in the fall of 2011 when a consumer noticed that there was a discrepancy between her credit card bill and the charge slip from the Safeway gas station on Hamilton Avenue. The promised rewards discount appeared on the receipt from the gas station. However, when she compared it with the actual credit card statement, she had been charged the full amount.
It turned out the overcharge was caused by an error in a faulty new software program. Under very specific and infrequent circumstances there would be a disruption. This disruption would cause the incorrect sale price going to the credit card company.
The software was installed in only three gas stations in California, Campbell, Pleasant Hill, and Palm Springs. A review showed that there were less than 30 erroneous sales at each of the Pleasant Hill and Palm Springs stations. There were approximately 700 sales that were over charged at the Hamilton Avenue Station.
After determining the overcharged customers, Safeway reimbursed them with credit to their rewards cards – adding extra money depending on the amount of the overcharge. In addition to the reimbursement, Safeway paid $45,650 in penalties to the County of Santa Clara. In settling the lawsuit, Safeway did not admit any liability or wrong doing and cooperated with prosecutors during the investigation.