State Reaches Settlement With Kmart; 19 Stores Allegedly Sold Expired Infant Formula

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NEWARK – The state has reached a settlement with Kmart in which the retail giant will pay $302,500, donate $25,000 worth of infant formula to charity, pay for continued unannounced state inspections, and implement meaningful remedial measures to inspect its merchandise, after 19 Kmart stores in New Jersey were found to have sold or offered for sale expired infant formula and non-prescription medications, Attorney General Jeffrey S. Chiesa and the New Jersey Division of Consumer Affairs announced today.

Inspections by Division of Consumer Affairs investigators found a total of 257 packages of infant formula and/or non-prescription medications that were from 9 months to 29 months past the expiration date, but still available for purchase on the shelves at the 19 stores. Investigators purchased a total of 68 expired items. The stores are located in Atlantic, Bergen, Burlington, Camden, Cape May, Essex, Gloucester, Mercer, Monmouth, Morris, Ocean, Passaic, and Somerset counties.

New Jersey’s Consumer Fraud Act expressly prohibits the sale of any infant formula or non-prescription drug subject to expiration dating requirements by the U.S. Food and Drug Administration, if the expiration date has passed.

Under the settlement, Kmart will submit to several measures intended to prevent its stores from again selling infant formula or medication that has expired.

Kmart will appoint two senior level management employees for 18 months to serve as compliance liaisons with the Division. These employees will conduct unannounced inspections of Kmart’s New Jersey stores to identify expiring and expired products, and review the stores’ compliance with Kmart’s policies regarding the expiration dates of infant formula and non-prescription medication. At least 20 of Kmart’s New Jersey stores will be inspected each quarter. The compliance liaisons will then submit quarterly reports to the Division of Consumer Affairs that will include any findings or resolutions, and a full explanation about any expired products that may be found on store shelves. They will also conduct scheduled conference calls with representatives of the Division of Consumer Affairs. At the end of the 18-month period they will submit a final certified report that, among other things, will compile all instances in which expired items were identified at the stores, any actual or recommended changes to Kmart’s policies, and an explanation of why such changes were or should be made.

Kmart will also maintain two “date code specialists” in each New Jersey store, for at least the duration of the 18-month period. Those employees will, among other things, inspect all date-coded items on a written rotational calendar. Any breaches they find will be investigated by supervisory personnel within the store, and reviewed by a compliance liaison.

Pursuant to the settlement, Kmart will also provide funding for random, unannounced inspections of its New Jersey stores by the Division of Consumer Affairs, continuing for one year. The Division retains the authority to perform further unannounced inspections as the Division determines necessary.

“Our unannounced inspections revealed expired infant formula and non-prescription medications at more than half of all Kmart stores in New Jersey, including every region of our state. Some products were more than two years past the expiration date,”  Chiesa said. “This is unacceptable, and a clear violation of our consumer protection laws. This consent order includes a plan by which we will continue to hold accountable every Kmart store in New Jersey, monitor their compliance, and demand results if any store is found to repeat this mistake.”

Also under the settlement, Kmart will pay a total of $302,500 to the state, including $255,000 in civil penalties and the remainder to reimburse the state’s attorneys’ fees and investigative costs. Kmart will also donate $25,000 worth of infant formula, with at least 21 days remaining before its expiration date, to one or more charities that provide direct assistance to infants and their parents or legal guardians.

“When parents buy infant formula and over-the-counter medication for their children, they have the absolute right to receive formula that has not expired, and fully lives up to its advertised nutritional content. When patients buy medication, they expect that it has not expired, and will properly address their symptoms without unduly posing a new health risk,” Eric T. Kanefsky, Acting Director of the New Jersey Division of Consumer Affairs, said. “This is a no-brainer. The fact that we found this problem at Kmart stores throughout the state indicated a systemic problem at Kmart that we have addressed through this settlement.”

The FDA recognizes infant formula as often being “the sole source of nutrition by a vulnerable population during a critical period of growth and development,” and requires that it have an expiration date. Infant formula consumed beyond its expiration date increases the risk that it may not contain the nutrient level required for proper infant development.

Over-the-counter drugs have unique formulations that consist of inactive and active ingredients geared to treat specific diseases. Medications consumed beyond the shelf life indicated by manufacturers, may have undergone chemical changes, may be less effective, and may pose potentially serious health consequences. The FDA mandates that all medication have expiration dates to help ensure the sale and usage of medication occurs within the drug’s shelf life.

Deputy Attorneys General Patricia Schiripo and Alina Wells, of the Division of Law, represented the State in this action. Investigator Oscar Mejia in the Office of Consumer Protection conducted the investigation.

Consumers who believe they have been cheated or scammed by a business, or suspect any other form of consumer abuse, can file a complaint with the New Jersey Division of Consumer Affairs by visiting its website or by calling 1-800-242-5846 (toll free within New Jersey) or 973-504-6200.


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