Richard Drew/AP Photo
The logo for Dollar General appears on a screen above a trading post, on the floor of the New York Stock Exchange, July 13, 2023.
Dominant discount retail chain Dollar General, which operates about 19,000 stores in the U.S., is being sued for an alleged “pricing scam.” In the class action lawsuit, customers allege that Dollar General frequently tags merchandise on store floors at a lower cost than what it rings up at the register.
The case was brought on behalf of the class by Dann Law, a firm spearheaded by former Ohio attorney general Marc Dann. “These guys are stealing a little bit from millions of people every day,” Dann told the Prospect. “There’s no question that they’re aware there’s a problem. And [that] they’ve been aware for a period of time.”
Dollar General’s practices, which essentially amount to false advertising, have financially harmed the “thousands if not tens or hundreds of thousands of consumers,” the lawsuit alleges. The suit, which was filed in New York, seeks an order declaring Dollar General in conflict with state law, as well as damages for the class.
Dann told the Prospect that his firm has collected “thousands of pages” of public records that show the violations. Part of the case has to do with “weights and measures standards,” which are designed to prevent stores from undercutting their customers by ensuring that products sold are the proper size and weight claimed on the packaging. As Dann told the Prospect, Dollar General regularly fails state and federal weights and measures tests, at an average of 20 percent.
But the main contention in the lawsuit is a simple one: The price on Dollar General’s tags isn’t the price customers actually pay.
This is not the first time Dollar General has been under scrutiny for its business practices. In 2019, New York state attorney general Letitia James charged the company $1.2 million in fines for selling expired and “obsolete” products, and extracted a promise from the company to reform its business practices. The fines were a result of a state investigation into the company wherein, over a three-year period, undercover state investigators routinely found that Dollar General sold expired products, including over-the-counter drugs, and violated New York’s bottle deposit policy.
The case by Dann is still in the discovery phase. Dann told the Prospect that class certification is under way, often the biggest challenge for class action litigation. Unfavorable rulings at the Supreme Court now make it difficult for harmed consumers to band together to challenge a large corporation.
However, backing the class action claims are multiple pending cases against Dollar General and other discount retailers, for a myriad of allegedly improper business practices. For example, a cleveland.com report reviewed county records and details how the chain has been failing inspections in Ohio. In one county, 14 stores were visited, and all failed inspections.
“Inspectors at one store found price tags that were two years old, and stores were still failing inspections as late as Jan. 26,” the story explains. “On rare occasions when price discrepancies were found, an item was a few cents cheaper. Most of the time, however, items were anywhere from 5 cents to a dollar more expensive, according to the inspection reports.” Ohio attorney general David Yost initiated a lawsuit in 2022, and recently settled for over a million dollars, with $750,000 of that money going to food banks and other hunger relief organizations.
Americans who rely heavily on discount chains such as Dollar General, Walmart, and Dollar Tree have a much tougher time dealing with junk fees and overcharges.
In September 2023, Missouri attorney general Andrew Bailey initiated a different lawsuit against Dollar General for pricing scams. As KOAM News reported, a joint investigation between the attorney general’s office and the Missouri Department of Agriculture Weights and Measures Division found that more than half of the inspected stores failed price accuracy checks, with discrepancies up to “as much as $6.50 per item.”
Kennedy Smith, senior researcher for the Institute for Local Self-Reliance, noted to the Prospect that Ohio’s attorney general found that pricing errors were consistently higher than the state’s allowed margin of error, up to 88 percent at one store.
“This begs the question of whether these scanning errors are actually accidental or if they are, in fact, intentional, particularly given that almost all of the scanning errors that have been caught are in the company’s favor, not the consumer’s favor,” Smith told the Prospect in an email. “It strongly suggests that the company is prioritizing its own bottom lines over adhering to the law.”
Deceptive pricing also sometimes happens at the high end as well. Several D.C. restaurants were recently sued for adding 3.5 percent menu fees onto all checks.
But the Americans who rely heavily on discount chains such as Dollar General, Walmart, and Dollar Tree have a much tougher time dealing with junk fees and overcharges. These discount retail chains are typically located in some of the nation’s poorest neighborhoods, which are disproportionately majority-minority. “The Dollar Store Invasion,” a report from the Institute for Local Self-Reliance, details how discount chains like Dollar General target rural, Black, and Latino communities, squeeze out local grocery competitors, and provide a cheaper, lower-quality alternative. The report notes how the business model of these discount chains leverages a lack of antitrust enforcement, food scarcity, poverty, and the economics of food retail to its advantage.
“In cities, it is common to find dollar stores clustered by the dozen within certain neighborhoods,” says the report, which includes an attached map of these store locations, and the demographics surrounding them, in eight major cities. “In rural towns, they typically locate near the only grocery store, and often succeed in wiping it out.” The results can increase food scarcity and inevitably make it harder for people of color to find fresh food.
The sheer size of Dollar General means that their pricing discrepancies can quickly add up. “While the overcharges are small amounts of money on each item, Dollar General has over 19,000 stores that are located in the poorest urban and rural areas of the county and the average income of their customers is $35,000,” Dann said in an email. “Many of their stores are in food deserts where their customers have few or no other alternatives to shop for food.”
Ironically, Dollar General has recently rolled back self-checkout and increased employee headcount in stores due to what they claim is an increase in shoplifting, though whether that has actually occurred is questionable. Meanwhile, the theft that routinely happens at the register, according to the class action suit and numerous investigations, has gone relatively unpunished.
“Dollar General can take [a dollar] from a customer, unknowingly, and not be prosecuted, and do it at such an immense scale that, over their 19,000 stores, they may be [doing it to] the tune of $100 million a year,” Dann said. “That’s a crime wave. But the victims aren’t people that are well represented in the justice system.”
Dollar General did not respond to a request for comment.
The ILSR report notes how communities have started to revolt against these discount chains, realizing the devastation to a neighborhood that one of these stores moving in can do. ILSR notes how, since 2019, at least 75 communities have blocked proposed dollar stores. It also calls for federal attention to this issue, such as antitrust enforcement that has been lacking for years, and funding for more independent businesses.
Regulatory agencies such as the Consumer Financial Protection Bureau and the Department of Justice seem curious about Dollar General and other discount store practices, but they have not yet made a major move. In the meantime, class action and state lawsuits will have to be the way forward for any possibility of holding these stores accountable for their alleged harms.
