Class-Action Suit Over Shortchanged Walmart Returns Allowed To Move Forward

While Walmart customers enjoy the ability to return items to any of the retailer’s locations, a number of these shoppers have claimed over the years that they were getting less for their returns than they should have because of sales tax differences between the purchase and return locations. Last week, a federal judge allowed a pending class action regarding shortchanged Walmart customers to continue.

The complaint [PDF], filed last May in a U.S. District Court for the Northern District of Ohio, alleges that Walmart “systematically shortchanges customers who return products to a store located in an area with a lower sales tax than the store from which the product was originally purchased by using that lower sales tax rate to calculate the refund, rather than the amount actually paid.”

So imagine you bought a $20 toy in State X, where the local tax brings the total cost to $21.40. Then you give that toy to your nephew in Delaware, only to find out afterward that the kid already has the toy. So the parents return the toy to Walmart, but since there’s no sales tax in Delaware, they may only get back $20.

The plaintiffs, two Ohio shoppers seeking to represent a much larger group of shortchanged Walmart and Sam’s Club customers, believe that, since other national retailers don’t have this problem with returns, that Walmart must be deliberately allowing the shortchanging to continue. The suit alleges a breach of contract on the retailer’s part.

Walmart attempted to have the case dismissed, claiming that this is an issue of seeking a sales tax refund and should not be heard in a federal court, but by the Ohio Tax Commissioner’s office.

But in ruling against Walmart’s motion to dismiss, the court held [PDF] that the requirement to seek redress through the state agency only applies to cases in which that tax has definitely been remitted to the state.

Since these claims involved returned items for which the full, tax-included price should have been refunded to the customer, it’s not a certainty that the taxes in question were remitted to the state. The plaintiff argues that there would be no reason for Walmart to hand over sales tax on items that don’t ultimately count as sold.

“At this stage, it is not clear whether Wal-Mart paid Ohio the sales tax that it did not refund to Plaintiffs when they returned the merchandise,” reads the order, adding that Walmart may indeed ultimately be right that this is a matter for the Tax Commissioner, but “at this stage, Plaintiffs have stated a claim over which the Court has jurisdiction.”


Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.