Family Dollar to pay $63 million to settle claims it overcharged customers

Family Dollar agreed to pay $63 million to settle allegations that it routinely overcharged its customers millions of dollars.

The Federal Trade Commission and 17 U.S. states have accused the discount retailer of violating prices displayed on store shelves, on price tags and in advertisements.

A proposed order prohibits Family Dollar from misleading customers about prices and requires the company to adopt what the FTC described as a “price accuracy program” that is independently evaluated and certified annually.

“Today’s order will ensure that Family Dollar stops misleading 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 Thursday.

Family Dollar operates more than 7,000 stores in 48 U.S. states and Washington, DC. The Chesapeake, Virginia-based company did not immediately respond to a request for comment on the settlement.

The FTC and states’ complaint alleged that pricing inaccuracies were widespread at Family Dollar stores and that the retailer failed to correct the errors. Customers regularly reported being charged higher prices at checkout than those displayed on product price tags, in stores, on the retailer’s website and in its mobile app, according to the complaint.

States include 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 sued another discount retailer, Dollar Generalfollowing allegations of similar deceptive pricing practices. The dispute is ongoing.

Refunds and customer discounts

The proposed order requires Family Dollar to establish a $40 million fund to compensate eligible customers.

The retailer will notify customers of their refund eligibility via in-store and online notices. Eligible customers include anyone who made a purchase at a Family Dollar store between January 1, 2023 and October 1, 2026.

THE the order also establishes a separate $20 million customer discount program. As part of the program, Family Dollar is to offer its customers 15% off a range of products for two days. The state plaintiffs will receive $3 million to split among themselves.

The retailer must create a pricing accuracy program to ensure it regularly monitors and audits prices and trains employees to identify and correct price discrepancies.