STOP & SHOP, PEAPOD HIT WITH PRICE FRAUD SUIT

BOSTON -- Stop & Shop Co. and Peapod, the Internet service it uses for home deliveries, have been accused of fraud, negligent misrepresentation and breach of contract in a class-action lawsuit filed here in Middlesex County Superior Court.The suit -- filed on behalf of three Stop & Shop on-line customers in the Watertown, Mass., area -- claims Peapod's Web site for Stop & Shop customers listed one

BOSTON -- Stop & Shop Co. and Peapod, the Internet service it uses for home deliveries, have been accused of fraud, negligent misrepresentation and breach of contract in a class-action lawsuit filed here in Middlesex County Superior Court.

The suit -- filed on behalf of three Stop & Shop on-line customers in the Watertown, Mass., area -- claims Peapod's Web site for Stop & Shop customers listed one set of prices but actually charged higher ones, telling customers who inquired that the Web site prices were only estimates and not actual. The suit says that some prices for home delivery were more than 20% higher than those at store level, despite claims that there were no differences.

The suit focuses attention on on-line pricing policies at a time when the number of home-shopping providers is proliferating on the Internet.

Officials of Stop & Shop, based in Quincy, Mass., could not be reached by SN for comment. Stop & Shop is a division of Ahold USA, Atlanta.

Peapod executives referred questions to Stop & Shop. Last week Peapod said it named Bill Malloy as president and chief executive officer. Malloy was AT&T's executive vice president of wireless operations. Malloy succeeds Andrew Parkinson, co-founder, chairman, president and CEO, who will continue as chairman. That company is based in Skokie, Ill.

In comments to the Boston Globe, Stop & Shop said it plans to reimburse customers in the Watertown area who said they believed they would not be charged higher prices for home delivery than for in-store shopping.

Peter Phillipes, general counsel for the chain, told the newspaper the Web site for Watertown-area consumers erroneously contained the promise that home-delivery customers would get "the same Stop & Shop prices, flier sales and loyalty-card savings" as in-store customers -- a statement he said should have excluded the word "prices" but did not.

Thomas W. Evans, the plaintiffs' attorney, told SN last week Stop & Shop initially estimated the differential to be between $115,000 and $175,000 -- a number Evans said was subsequently lowered by the chain to $72,000.

Evans said his clients and others who may join the suit will seek triple damages, or roughly $500,000.

Ken Harris, partner in Cannondale Associates, Evanston, Ill., said, "I think the suit is unfortunate. [Peapod] was perhaps overzealous in its claims. I understand why customers would view this as unfair, but I don't think there was any malicious intent."