Customers get their $25 Loblaw gift card as compensation for overpriced bread

Loblaw’s attempt to smooth over a bread price-fixing scandal with a $25 gift card appears to be paying off — at least for some customers. The grocer started mailing the cards this week to many happy recipients.

Grocer started sending out the cards this week to placate customers

Sharron Katz in Stratford, Ont., with her $25 Loblaw gift card that arrived in her mail this week. (Submitted by Sharron Katz)

Loblaw's attempt to make amends for its part in a bread price-fixing scandal with $25 gift cards appears to be paying off — at least for some customers.

The grocer started mailing the rebates this week to people who've already registered online. Loblaw said the gift cards should take six to 12 weeks to arrive and customers have until May 1 to sign up.

"It made me happy," said Sharron Katz in Stratford, Ont., who received her card on Thursday after signing up early last month. "I just thought, 'Great, $25 of free groceries.'"

She believes Loblaw did the right thing by offering customers compensation after publicly admitting its role in the scandal.

"It's a positive thing," Katz said. "Saying, 'Yeah, you know, we made a mistake and we're coming clean,' I think that's meaningful."

But not everyone is buying into the rebate program. "It doesn't make it right or OK," said Brenda Clarke from Brockville, Ont., who has also received her gift card and plans to donate it to charity.

Also still dissatisfied are customers signing up for the multiple proposed class-action lawsuits launched following the bread price-fixing revelations.

"When I heard about the Loblaw card, I thought, '$25, that's nothing compared to what they've overcharged me over 14 years,'" Irene Breckon from Elliot Lake, Ont., told CBC News.

She's the lead plaintiff in a $1-billion class-action lawsuit filed against Loblaw.

Paying back customers

In December, Loblaw and its parent company, George Weston Ltd., confessed to taking part in what the Canadian Competition Bureau alleges was an industry-wide bread price-fixing scheme that involved five major grocers and two bakeries.

They all allegedly agreed to bump up the price of bread by at least $1.50 over the course of about 14 years, starting in 2001.

According to Statistics Canada, Canadian households spent an average of $260 a year on bread since 2010.

Loblaw is the only company to admit to any wrongdoing, and will receive immunity from prosecution for co-operating with the Competition Bureau's investigation.

To try to avoid customer backlash, the grocer is doling out gift cards to people who previously purchased its bread at inflated prices.

"We have been very public in our response — including beginning to pay our customers back," said Loblaw spokesperson Kevin Groh in an email to CBC News.

'They've set the tone'

Dalhousie University professor Sylvain Charlebois believes the gift card strategy is a brilliant move, because it appears to have shifted the conversation in Loblaw's favour.

"They've set the tone," said Charlebois, who specializes in food distribution and policy.

"The narrative over the $25 gift card has really overpowered everything else, including the bureau's investigation."

Indeed, social media is buzzing with customers announcing the arrival of their card, and many recipients told CBC News they thought it was a positive move.

"That was a free gift to my home and my family and my pocket," said Real Desmarais in Abbotsford, B.C. 

"It was only $25 but, for some reason, it's so exciting," said Karen Parsons in Sarnia, Ont. The dog groomer and animal lover plans to donate her card to the local humane society.

"I think it's very honourable of them," she said of Loblaw.

Karen Parsons's pet dogs pose with the Loblaw gift card she plans to donate to the humane society. (Submitted by Karen Parsons)

But not everyone is praising the grocer.

"Giving a gift card, it is kind of a gimmick," said Clarke in Brockville, Ont.

She still harbours uneasy feelings about the bread price-fixing scandal.

"Working in retail all my life, I always get really disappointed when you see things like this when people aren't following the proper rules," she said.

Clarke and her husband have both received their cards and will donate them to the local food bank. 

"I just wanted to turn it into something positive," she said.

Brenda Clarke and her husband, Chris Wood, above, plan to donate their $25 Lobaw gift cards to the food bank. (Submitted by Chris Wood)

Denise Sinclair in Brandon, Man., is also not satisfied with the $25 gift card she received on Tuesday, which has already been spent on groceries.

Four adults and five children live in Sinclair's home, and she estimates she spends up to $24 a week on bread. So she figures the price-fixing scandal cost her much more than the $25 she got back.

"It kind of makes you realize that — wait a second — you basically just paid me a week of bread," said Sinclair, who believes the card's value should have been higher.

"It just kind of disappoints me."

Denise Sinclair doesn't believe a $25 gift card covers the extra money she spent on bread for a family of nine over the years. (Submitted by Denise Sinclair)

Customers redeeming gift cards should take note that while participating in the rebate program doesn't preclude someone from signing up for a class-action lawsuit, $25 will be deducted from any potential payouts from lawsuits down the road.

Loblaw said, at this time, it doesn't plan to cap the number of people who can receive a card.

About the Author

Sophia Harris

Business reporter

Sophia Harris has worked as a CBC video journalist across the country, covering everything from the start of the annual lobster fishery in Yarmouth, N.S., to farming in Saskatchewan. She now has found a good home at the business unit in Toronto. Contact: sophia.harris@cbc.ca