Is Wal-Mart defrauding customers with 'organic' offerings?

The rumors about Wal-Mart intentionally mis-labeling and mis-packaging certain food offerings in its stores last year as the retailer moved into the "organic" arena have been around since the start of Wal-Mart Stores, Inc.'s (NYSE:WMT) new entry into selling organic foods and related items.

Strike the heaviest blow yet to the retailer on that note, though. Wisconsin-based Cornucopia Institute, an advocacy group, is accusing Wal-Mart of "organic fraud." The group claims that Wal-Mart is defrauding its customers by mislabeling non-organic products as organic. The Cornucopia Institute promotes sustainable farming and is one of the largest watchdogs of the organic food market as newer and larger retailers push their way into the approximately $15 billion industry.

The group stated that it conducted checks of Wal-Mart stores in five states -- and discovered labeling violations in virtually all of the "dozens of stores" it visited. While that does not constitute fraud in "all" Wal-Mart stores as it relates to "organic fraud," it is a decent representative sample nonetheless.

Wal-Mart came back with a rather goofy defense to the allegations, saying that it often mixes organic and conventional products on its shelves to make it easier for customers to find organic options. Um, what? I think separating organic and non-organic foods would make it much easier to distinguish between the two -- not the other way around.

The company responded with an emailed statement: "Although Wal-Mart has more than 2,000 locations that may offer up to 200 organic selections in addition to thousands of non-organic offerings, we believe it to be an isolated incident should a green organic identifying tag be inadvertently placed by or accidentally shift in front of the wrong item."