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Dunkin' Donuts Allegedly Overcharged Thousands of Customers in NY and NJ [Updated]

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Franchisees charged sales tax when they shouldn't have.

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Dunkin' Donuts locations in New Jersey and New York are now facing multiple lawsuits: According to the New York Post, a number of stores have been habitually overcharging customers by charging sales tax on items that should not be taxed by law.

The stores allegedly violated state regulations by charging customers sales tax on items like pre-packaged bags of coffee beans. According to attorney Carl Mayer, who is handling all the suits, "A dozen different Dunkin’ stores overcharged customers around 70 percent of the time."

New York has some admittedly complex rules on which food and beverage items should be taxed and which should not; for example, pretzels are exempt from tax, unless they are chocolate-coated in which case they are not exempt. But as far as items sold at Dunkin' Donuts goes, it's a little more simple: "Food sold that may be eaten at an eating area (i.e., an area with tables and seating) in the store or just outside the store is taxable." That would not, however, include packaged coffee beans, which would presumably be prepared at home.

Five people have now filed lawsuits against Dunkin', including a class-action suit in the U.S. District Court of Southern New York. While sales tax on coffee beans may seem like a pittance, it adds up over time: Mayer estimates that the stores in question "made $10 million off New York customers and $4 million in New Jersey over three years."

Dunkin' Donuts' fresh-baked scandal brings to mind a recent Whole Foods debacle: A sting operation by New York City's Department of Consumer Affairs revealed the bourgeois grocer had a habit of overcharging customers for pre-packaged foods priced by the pound, leading to a $500,000 settlement.

Dunkin' Donuts told the Post it's "in the process of reaching out to its franchisees to get to the bottom of the issue." Reached by email for comment, the doughnut chain responded: "Dunkin' Donuts has over 1,000 restaurants in New Jersey and New York that are owned and operated by individual franchisees, who are expected to comply with all applicable state and federal laws including those relating to taxation. We are in the process of reaching out to the franchisees identified in the complaint in order to determine whether these taxes were charged to customers."

Check out the class-action lawsuit filed against Dunkin' in U.S. district court, below:

Dunkin Donuts Class Action Lawsuit

Update 2/9/16: This post has been updated to include a statement from Dunkin' Donuts.

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