Safeway Sued For Not Alerting Loyalty-Card Customers To Food Recall

A non-profit group sued the $41 billion Safeway grocery chain Wednesday (Feb. 2) for continually failing to notify customers about recalls, even though many of those customers used their CRM cards and were theoretically contactable.

The Center for Science in the Public Interest (CSPI) argued that when "Safeway learns that recalled products have been sold in its stores, it has a duty to disclose to customers that they face serious health risks or even death if they eat the recalled products. Safeway chooses not to notify its customers who purchased recalled products, thereby putting them at risk."

The lawsuit added a claim that "this action will cost Safeway nothing, because Safeway's suppliers agree to reimburse all costs associated with notice and refunds." That last claim may not be fully true, as the cost of revamping IT systems to allow for such customer communications will not necessarily be covered.

If a chain, for example, has opted to never E-mail loyalty-card-using customers, setting up such a communication capability could be extensive (and expensive). And it's unlikely that manufacturers would consider that a recall cost, as opposed to a pure marketing cost. After all, some chains do use E-mail outreach, and there's no reason for manufacturers to have paid for that.

The lawsuit said that Safeway should go beyond E-mail to alert consumers about recalls. "To effectuate this recall, Safeway should use, to the fullest extent possible, automated register printouts, telephone calls, letters, E-mails and text messaging, and prominent statements in Safeway stores and on the homepage of," according to the court filing.

Safeway, understandably, has a very different view.Safeway, understandably, has a very different view. Safeway argues that it handles recalls "consistent with all legal/regulatory requirements" and that it issues news releases and posts information on its Web site. It also sometimes posts recall notices at POS devices in its stores and prints the information on POS receipts. To the point of the lawsuit, according to Teena Massingill, director of corporate public affairs for Safeway, the chain has sometimes "used Club Card data to make automated or personal telephone calls to customers regarding recalled products."

Massingill added, however, that there are good reasons for the industry to not standardize on such CRM-based alerts.

"One size does not fit all. Indeed, less than 50 percent of all grocery retailers even have (loyalty CRM) programs, thus the ability to contact customers individually is not an industry norm," she said.

Safeway's E-mail also raised Safeway data consistency issues. "Shoppers are not required to provide contact information to obtain a Safeway 'Club Card' frequent shopper card. Neither do they purchase a membership, which requires them to supply personal contact information, as do shoppers of retail clubs like Costco," Massingill said. "We consider the information/data that is available to determine how to best provide recall information to our customers."

Similar lawsuits—on behalf of various consumers who purchased recalled products—have been going on for years. Back in 2004, it was Kroger's turn to be sued. That lawsuit was eventually dismissed. But Kroger's today uses its CRM database to alert customers to recalls, along with PriceChopper and, most notably, Costco, which has been pushing telephone outreach. The issue hasn't been limited to grocery chains, either. Macy's is entangled in the obligation-to-alert mess with the Los Angeles District Attorney's Office and some lead-encrusted jewelry.

This has been a key issue for CSPI for years. The non-profit even launched a campaign—exactly one year ago—pointing to Costco as a retailer to emulate. In Wednesday's lawsuit, CSPI referenced Kroger's, Wal-Mart, Sam's Club, Costco, Giant Food, Harris Tweet Food Markets, Wegmans Food Markets and ShopRite Supermarkets as chains that have now embraced alerting customers to recalls.

Safeway's well-articulated consistency concerns notwithstanding, our take is that this should be an easy decision. Creating the ability to use E-mail, texting and other methods to stay in contact with loyalty customers should be done anyway. Once done, this type of recall outreach is relatively pain-free.

What benefits? First, consumers receiving such communications are likely to be extremely loyal for quite some time. Second, touting such capabilities is a wonderfully effective argument for getting a lot more customers to use their loyalty cards routinely. That also addresses Safeway's data consistency concerns, as most customers will gladly volunteer accurate contact data if it means fast recall notifications. (That increase in loyalty card usage—and contact information accuracy—alone is worth the proverbial price of admission.)

Lastly, why not? If just one or two customers are hurt or killed—and there's a good chance some might be children—because of the lack of notice, the legal liabilities (not to mention the PR disaster) could be devastating. So why risk it?