FTC, states file suit against Dollar General over alleged misleading price tags

The Federal Trade Commission, joined by 20 states, has sued Dollar General over claims that the discount chain misled shoppers by charging more at the register than the prices shown on shelf tags and advertisements.

“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.

The FTC’s complaint includes partially redacted internal Dollar General emails and company communications, along with consumer complaints about mismatched prices and details from an undercover investigation conducted by the agency.

Dollar General said the lawsuit “suggests that we have abandoned our mission and willfully disregarded the affordability needs of our customers. Nothing could be further from the truth.”

The retailer said it strives for accurate pricing, while acknowledging that “occasional price discrepancies” can happen.

According to the FTC, Dollar General has frequently charged higher prices at checkout than those listed in circulars, digital promotions and in-store displays. The company has received more than 29,000 complaints about price honoring between January 2023 and the end of March this year.

FTC investigators made undercover purchases at Dollar General stores in Ohio, Pennsylvania, Missouri and Maryland and found that every transaction resulted in prices at the register that were higher than advertised.

In one example, an undercover purchase at an Ohio store found that 13 of 58 items were priced differently at checkout than on the product label or shelf tag.

The complaint says the company’s fast-moving register screens can make it difficult for shoppers to spot discrepancies in real time.

Even after thousands of consumer complaints and failed pricing inspections, Dollar General “has failed to implement policies and practices to adequately address the problem,” the FTC said.

The agency and the states argue that the retailer violated the FTC Act, the Gramm-Leach-Bliley Act and state laws.

“Dollar General has for years engaged in deceptive conduct that harms the very consumers it claims to serve,” the complaint said. “Although Dollar General promises convenience, low prices, and value, the company has routinely charged customers more at the register than the price displayed on shelves, price tags, and advertisements.”

Dollar General said it learned of the investigation in February and cooperated by turning over data, documents and sworn testimony. The company said it received a draft of the complaint last month and objected to the FTC’s initial settlement proposal, which it described as having “many methodological flaws.”

“The FTC staff also demanded a monetary amount that was untethered to – and orders of magnitude larger than – any realistic assessment of amounts attributable to pricing discrepancies,” Dollar General said.

The retailer said it will fight the case “vigorously.”

“We remain ready and willing to engage in reasonable, meaningful discussions to resolve this matter while keeping our focus on what has always been at the heart of Dollar General – serving our customers and the communities we call home,” the company said. “That commitment has not changed and will not change as we navigate this matter.”

Dollar General reported second-quarter net sales of $11.3 billion, up 5.2% from a year earlier, as more higher-income shoppers have turned to the chain. During an earnings call in August, CEO Todd Vasos said the company’s large rural store base is a key advantage.

“Our mature store base is a unique competitive advantage that enables us to serve customers in smaller, rural communities across the country,” Vasos told analysts.