Serving California, Ohio, Pennsylvania, and Illinois with COVID-19 precautions in place and convenient virtual meetings.

Lawsuits claim consumer fraud against several donut franchises

Several class action claims against a giant food retailer were recently filed in federal district courts. The lawsuits are in the nature of consumer fraud claims alleging that national franchiser Dunkin’ Donuts illegally taxed consumers on the purchase of coffee bean bags that were purchased to take home. State tax laws allegedly provide that such purchases cannot be taxed. It is unknown whether California stores would be involved in future claims, but the claims filed so far involve about a dozen different stores in other states.

Although coffee bean purchases appear to be a minor amount of change in terms of the tax charged, the lawsuits are claiming that, in the course of three years, the stores made around $14 million in excess funds that should have remained in consumers’ pockets. The Dunking Donuts corporate office stated that its franchise operators are expected to follow all state and federal tax laws and regulations. The complaints sue the main corporate entity, Dunkin’ Brands, Inc. and a number of retail stores.

The complaints accuse the stores of knowingly duping consumers for the extra money despite customers’ complaints. The suits allege that the stores overcharged customers about 70 percent of the time, which indicates an unknown variation in these taxing policies. The allegations also indicate that the stores intentionally pocketed the money instead of sending the funds in to state agencies for tax payments.

Because the particular sales carried no tax obligation, the stores would not have submitted taxes that were not assessed. That fact makes it apparent that the plaintiffs, who are all store customers, are alleging not just negligence but a pattern of consumer fraud carried out by the stores against their customers. It is unknown if California exempts coffee bean take-home sales from a sales tax, but if so, the state can expect to see a flurry of class actions on that issue or similar ones sometime soon.

Source: eater.com, “Dunkin’ Donuts Allegedly Overcharged Thousands of Customers in NY and NJ “, Whitney Filloon, Feb. 9, 2016