FTC and 20 states sue Dollar General, alleging retailer overcharged shoppers

The Federal Trade Commission said Monday that it filed a lawsuit along with 20 states accusing Dollar General of charging customers more than the prices it displays on shelves, price tags and in advertisements.

Shares of Dollar General dropped about 4% after the FTC announced the lawsuit.

The complaint alleges that thousands of Dollar General stores have "taken advantage of vulnerable shoppers by extracting millions of dollars in unlawful overcharges with insufficient safeguards to prevent the practice."

It also argues that Dollar General has received "tens of thousands" of complaints from consumers about charging higher than advertised prices, but that it has not implemented policies to address the problem.

The states joining the FTC in the lawsuit are Alabama, Arizona, Arkansas, California, Connecticut, Florida, Illinois, Iowa, Kansas, Louisiana, Michigan, Mississippi, Nebraska, New Jersey, North Carolina, Ohio, Oklahoma, Tennessee, Utah and Wisconsin.

"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," said Christopher Mufarrige, director of the FTC's Bureau of Consumer Protection.

Dollar General issued a statement in response to the lawsuit, saying it will "defend this litigation vigorously."

"As with other retailers and despite our policies and procedures, occasional price discrepancies can occur," the statement read. "When that happens, our store teams are instructed, empowered, and expected to make things right for the customer. In recent years, we have enhanced our price-accuracy processes and remain committed to continuous improvement."

Dollar General's statement said that it has cooperated with the FTC's investigation since February and has produced documents, data and sworn testimony. In September, the FTC sent a draft complaint and settlement offer. The company said it had sent a monetary counteroffer and was surprised when the FTC filed the lawsuit rather than responding to the offer.

The suit comes as shoppers look for discounts while they face elevated food and gas prices. Officials across the political spectrum also aim to show their efforts to protect consumers from high costs ahead of the midterm election next week.