PEAPOD SETTLES PRICE SUIT

CHICAGO -- Peapod here and Stop & Shop Supermarket Co., Quincy, Mass., said last week they have established a $200,000 escrow fund to compensate certain Boston-area customers who may have been misled by statements made by the online grocery company in 1999.

ame as those charged at Stop & Shop's retail stores.

Peapod and Stop & Shop are currently divisions of Ahold USA, Chantilly, Va., a wholly owned subsidiary of Netherlands-based Ahold.

However, Peapod was not a part of Ahold at the time it initially offered its online service to Stop & Shop customers.

Under the agreement with the AG's office, the two companies agreed to pay a fine of $50,000 to the state, plus approximately $50,000 in attorneys' fees to the plaintiffs' counsel.

In a joint statement last week, Peapod and Stop & Shop said they denied all allegations of wrongdoing, explaining they did not act unfairly or seek to mislead Peapod customers. Peapod also said it has placed a statement on its Web site informing customers that the prices of Stop & Shop groceries purchased online through Peapod may be different from in-store prices.

The class-action lawsuit was filed in late 1999 by three Stop & Shop online customers in the Watertown area who claimed Peapod's Web site for Stop & Shop customers listed one set of prices but the online grocer actually charged prices up to 20% higher than those at store level. The suit also alleged that customers who inquired were told the Web site prices were only estimates and not actual prices.

In announcing terms of their agreement with the attorney general's office last week, the two companies said they will distribute the $200,000 in the escrow fund to customers based on their purchase levels during the eight-month period. Peapod said it is in the process of examining its records to determine which customers were affected.

If the entire escrow amount is not fully distributed, Peapod and Stop & Shop said they will donate the remainder to the Massachusetts attorney general's Consumer Aid Fund.

According to Marc van Gelder, Peapod president and chief executive officer, "Peapod and Stop & Shop did not intend to confuse Peapod customers, and we apologize for any misunderstanding."