DG Stock In Focus: FTC Accuses Dollar General Of Overcharging Shoppers

• The FTC alleges Dollar General repeatedly charged customers more than advertised prices.
• The agency says the practice harmed shoppers, especially those on tight budgets. 
• Earlier, JPMorgan raised its price target for Dollar General to $178, seeing 38% upside. 

Dollar General Corp. (DG) stock is drawing attention after the Federal Trade Commission (FTC) and 20 states sued the discount retailer over alleged deceptive pricing practices. The complaint claims stores repeatedly charged customers more than advertised prices, causing millions of dollars in overcharges. 

Dollar General stock declined 3% on Monday. The stock has been down for the past two weeks. 

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FTC Alleges Widespread Overcharging On Dollar General

The federal lawsuit claims Dollar General stores repeatedly charged shoppers more at checkout than the prices advertised on shelves, labels, and promotional materials. 

The complaint says Dollar General kept making pricing mistakes even after customers raised concerns and the company knew about the problem. The FTC and the states claim the retailer failed to take proper steps to stop or fix the errors. 

“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, FTC’s Bureau of Consumer Protection. 

“The FTC’s action underscores the agency’s commitment to lowering costs for consumers by stopping deceptive pricing practices that harm AmerDollar General operates more than 21,000 locations across the U.S. and attracts customers with low-priced household essentials. 

Dollar General’s Legal Challenges And Next Steps

The FTC and the 20 states contend that the alleged conduct violates the FTC Act, the Gramm-Leach-Bliley Act and applicable state laws. The states involved are Alabama, Arizona, Arkansas, California, Connecticut, Florida, Illinois, Iowa, Kansas, Louisiana, Michigan, Mississippi, Nebraska, New Jersey, North Carolina, Ohio, Oklahoma, Tennessee, Utah and Wisconsin.

The FTC approved the filing in a unanimous 2-0 vote. The case was brought before the U.S. District Court for the Middle District of Tennessee. 

Earlier on Monday, JPMorgan analyst Matthew Boss raised Dollar General’s price target to $178 from $176 and maintained an ‘Overweight’ rating, implying a 38% upside from the stock’s last close. The firm also added the stock to its Analyst Focus List and increased its third-quarter estimates after research showed that lower-income shoppers continued to spend steadily.

DG Stock: Retail View 

On Stocktwits, retail sentiment around the stock remained ‘bearish.’ The stock saw a 650% surge in message volume over the past week. 

DG stock has declined over 3% year-to-date. 

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