Supplier Sues UNFI in Chargeback Spat
“Omaha Industries alleges that the grocery distributor withheld over $250,000 from invoice payments to offload its own risk.”
UNFI truck parked on side of street. The food distributor was recently sued in a dispute over hundreds of thousands of dollars in chargebacks to the supplier. Peyton Bigora/Supply Chain Dive
Tracking and accounting for Chargeback fees is vital for our CPG clients. These are deduction fees that a distributor will add to an invoice when a retailer buys a product from them at a discount. Chargeback fees also usually come with an added fee or upcharge from the distributor on top of it, making them add up quickly.
Recently, companies have finally had enough of UNFI’s chargebacks and are fighting back against hefty these fees. Hopefully, this will bring needed change on the distribution side.
Ben Unglesbee, Senior Reporter at Supply Chain Drive, just released an article on where Omaha Industries reported over $250,000 in withheld chargeback fees and they are fighting back."
Pet food and ingredient supplier Omaha Industries sued United Natural Foods Inc. last week over allegations of fraudulent conduct and what the supplier described as an effort “to offload the risk of loss from itself to Omaha Industries.”
At issue are hundreds of thousands of dollars in chargebacks that Omaha said UNFI, one of the largest grocery distributors in the country, deducted from its payments on invoices to Omaha.
The chargebacks — allowed for under the two firms’ contract in cases where product is deemed “unacceptable” — were tied to pet food shipments that UNFI sold to the grocer Giant Food. Omaha said in its complaint that the chargebacks began in October 2022 and would pile up to $268,816.94 on more than $326,780 worth of products Omaha sold UNFI by the time it filed the lawsuit.
“In other words, to date, UNFI has charged back roughly 82% of the value of the Product provided by Omaha Industries to UNFI relating to the Product sold to GIANT,” the company said. Further chargebacks assessed by UNFI at wholesale cost — above what the distributor charged Giant — put the total amount at more than what Omaha has invoiced UNFI, the company alleged.
Asked about the allegations, a spokesperson for UNFI said that the company does not comment on litigation.
The supplier also alleged that UNFI never returned any of that product or disposed of it under terms spelled out in their contract. “Omaha Industries does not know the exact whereabouts of the chargeback products because UNFI has refused to provide a full accounting to Omaha Industries despite Omaha Industries’ requests for the same,” the company alleged. continue reading…
#accounting, #omahaindustries, #unfi, #supplychaindrive #businessnews
