Family Dollar has agreed to pay $63 million to resolve allegations that it overcharged customers by millions of dollars over an extended period.
The Federal Trade Commission and 17 states accused the discount retailer of failing to honor prices posted on store shelves, product tags and advertisements.
A proposed order would prohibit Family Dollar from misrepresenting prices and require the company to establish a “pricing accuracy program.” The program must be independently reviewed and certified each year.
“Today’s order will ensure Family Dollar stops deceiving consumers about its prices and returns money to consumers harmed by these practices,” Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, said in a statement Thursday.
Family Dollar operates more than 7,000 stores in 48 states and Washington, D.C. The Chesapeake, Virginia-based company did not immediately respond to a request for comment on the settlement.
According to the FTC and the states’ complaint, pricing errors were widespread across Family Dollar stores, and the retailer failed to address them. Customers frequently reported being charged more at checkout than the prices shown on product labels, in stores, on the company’s website and through its mobile app.
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The states involved are Alabama, Arkansas, Colorado, Florida, Iowa, Illinois, Kansas, Louisiana, Mississippi, Nebraska, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Utah and Wisconsin.
In October, the FTC and 20 states filed a lawsuit against another discount chain, Dollar General, alleging similar deceptive pricing practices. That case remains ongoing.
Customer refunds and discounts
Under the proposed order, Family Dollar must create a $40 million fund for eligible customers.
The retailer will inform qualifying customers about reimbursement through notices in its stores and online. Eligibility extends to anyone who purchased an item at a Family Dollar store between Jan. 1, 2023, and Oct. 1, 2026.
The order also creates a separate $20 million discount program. Through the program, Family Dollar must provide customers with 15% off a selection of products for two days. The state plaintiffs will receive a combined $3 million, which they will divide among themselves.
Family Dollar must also implement a pricing accuracy program that regularly checks and verifies prices while training employees to identify and correct discrepancies.
