The Federal Trade Commission and 20 states sued Dollar General $DG on Monday, alleging the retailer billed shoppers at checkout above what was posted on its shelf labels, tags and ads. Dollar General stock lost over 4% of its value during afternoon trading Monday.
The complaint was filed in the U.S. District Court for the Middle District of Tennessee. The FTC and the states allege the practices violate the FTC Act, the Gramm-Leach-Bliley Act and state laws. The Commission voted 2-0 to authorize staff to file the complaint, the FTC said.
The states that joined the FTC are Alabama, Arizona, Arkansas, California, Connecticut, Florida, Illinois, Iowa, Kansas, Louisiana, Michigan, Mississippi, Nebraska, New Jersey, North Carolina, Ohio, Oklahoma, Tennessee, Utah and Wisconsin.
According to the complaint, Dollar General has put incorrect prices on products and billed shoppers too much for years, and it has let the errors persist. The complaint says thousands of stores preyed on shoppers who are vulnerable, collecting millions of dollars through illegal overcharges while lacking adequate protections against it. It also says shoppers complained in the tens of thousands that the company would not honor its advertised prices.
"Dollar General has betrayed the trust of millions of American consumers and imposed significant financial harm on communities and consumers who are already struggling to make their paychecks last," Christopher Mufarrige, director of the FTC's Bureau of Consumer Protection, said in a statement.
Dollar General operates more than 21,000 stores nationwide and markets itself as a low-priced alternative to large discount and big-box retailers, the FTC said. The agency said low- and fixed-income customers rely on the accuracy of its pricing.
The lawsuit draws on shopper complaints, state inspections the retailer did not pass and the FTC's own undercover purchases, according to Reuters. Sections of the complaint covering what the company knew about the practices are redacted, according to Reuters.
Since 2019, Dollar General has settled with six states over inaccurate pricing, paying a total of $6 million, according to Reuters. Dollar General had not responded to a request for comment as of Monday afternoon, according to Reuters.