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Mariano's overcharges customers for Chicago's checkout bag tax

Chicago grocery store chain overcharges customers for Chicago bag tax
Chicago grocery store chain overcharges customers for Chicago bag tax 03:32

CHICAGO (CBS)  An observant shopper spotted something unusual on a recent grocery receipt this past winter—and contacted the CBS 2 Investigators who got money-saving results for her and others who shop at a large grocery chain.

The receipt

Darlene Norman stopped in at the New East Side Mariano's on Benton Place to pick up a couple of items one day in late February. She didn't notice anything odd until she checked out and left.

"I usually have bags with me, but this time I didn't," Norman said, "and I noticed on the receipt, they had charged 10 cents."

Mariano's receipt from February 26, 2024 shows an overcharge for Chicago's Checkout Bag Tax CBS Chicago / Tim Viste

That dime charge on Norman's receipt was identified as a "paper bg fee." In actuality, that's the Chicago "checkout bag tax," which is supposed to be 7 cents per bag.

The Chicago bag tax

Mayor Rahm Emanuel's administration created and implemented the Chicago bag tax. It took effect in February 2017 – after the city's plastic bag ban was eliminated.

The tax was implemented to help the environment. In April 2017, then-Mayor Emanuel was quoted in a news release as touting the initial benefits: "I am glad so many Chicagoans are choosing to forgo paper or plastic bags at checkout."

However, in 2024 – seven years after implementation – Chicago's revenue figures suggest the opposite is happening.

Per city ordinance, retailers get to keep 2 cents of the 7-cent tax. The other nickel per bag sold is paid to Chicago's Department of Finance.

In 2017, the tax generated just over $5 million for the city. That figure increased to $15.8 million in 2022, and $17.5 million in 2023. The city's 2023 budget estimated the shopping bag tax would generate $8.1 million.

The actual revenues continue soaring. This year in the first four and a half months the city has already collected more than $13 million. The grand total over seven years is more than $78 million for city coffers.

Jordan Parker is the Executive Director of the Triveni Institute, a nonprofit whose mission is to address cultural wastefulness and reduce trash and pollution.

Parker first backed the bag tax. Now, she has second thoughts. 

"I don't think it was ever intended to be an environmental effort," she said.

Those figures suggest the number of single-use bags sold has increased as well – from 101 million in 2017 to more than 350 million in 2023. In 2024, the revenue data indicate more than 266 million bags sold in the first few months of the year.

"Looking at the numbers, this is alarming," Parker said.

Retailers, per the ordinance, are also keeping more. In 2023, businesses' share was around $7 million.

When CBS 2 brought the 10 cent bag fee on Mariano's receipt to the company's attention, a spokesperson responded the next day—thanking CBS 2 for "bringing the issue … at our Chicago stores" to Mariano's attention, admitting the "error," and promising to fix the "mistake" immediately.

The company provided a support team number for customers to call with any questions: 1-800-576-4377.

Another Mariano's on Elston Avenue in Jefferson Park was the subject of a complaint filed with Chicago's Business Affairs and Consumer Protection (BACP) department in January 2024, a month before Norman's receipt. The person who filed the January complaint did not respond to investigators' request for more information. 

BACP closed that complaint. It's unclear whether Mariano's was ever notified about it.

Mariano's mistake

Per Chicago's ordinance, stores can charge whatever price they want to sell you a bag. That's considered a fee. But Mariano's admitted the "paper bg fee" on Darlene Norman's receipt was in reality city bag tax. 

So, how did the mistake happen? How much more did Mariano's take in because of overcharging customers in at least one of their stores? How many of the grocery stores in Chicago were overcharging, and for how long? Did Mariano's pay the city the tax it owed?

CBS 2 sent those follow-up questions several times over the course of months to numerous people at Mariano's and city representatives. Mariano's never provided additional answers.

CBS 2, through public records requests, also attempted to obtain individual tax payment data for Mariano's from the city and was told in an email, "The tax payments made by an individual business are confidential information."

So is the city investigating Mariano's not only for overcharging customers, but for mislabeling the tax as a fee on receipts? The city said both issues could be ordinance violations that result in fines, but in an email, said it "cannot comment on any active or ongoing investigations."

Sample receipts showing proper labelling/placement of the Checkout Bag Tax Chicago Department of Finance

CBS 2 checked back, and discovered the New East Side Mariano's had changed the receipt to label it correctly as a bag tax, and to charge the correct amount.

After CBS 2 inquiries, Mariano's adjusted the tax amount and labeling on store receipts CBS Chicago

Bag fees and taxes becoming more common

Since 2018, six additional Illinois communities have passed single-use bag taxes or fees. Oak Park was the first to join Chicago.

In the fall of 2023, Mariano's implemented a pilot program in its Naperville store to charge customers .10 per paper bag used. That pilot is part of parent company Kroger's plan to eliminate single-use plastic bags by 2025.

Full Mariano's statement:

Thank you for bringing the issue regarding the bag tax charge at our Chicago stores to our attention. Upon receiving your inquiry, we conducted a thorough investigation into the matter.

We discovered that there was an error in the bag tax charge applied to our customers' purchases. The correct tax should have been 7 cents per bag, as per the local regulations, instead of the 10 cents. We want to assure you that we have taken immediate action to rectify this mistake, and the correct tax amount of 7 cents is now being applied.

We sincerely apologize to our customers for any inconvenience this may have caused. Should any of our customers have questions or concerns regarding this issue, we encourage them to reach out to our support team at 1-800-576-4377. Our team is fully prepared to assist with any inquiries and to provide the necessary support to resolve any issues that may have arisen from this error.

--Mariano's Spokesperson

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