Last month, a press release from the North Carolina Department of Agriculture and Consumer Services’ Standards Division caught our eye.

The press release was titled – Eight stores pay fines for price scanning errors.

And it reported on a Dollar General store in Warren, North Carolina that was hit with $4,245 in penalties. 

An initial inspection in July found an error rate of 40% based on 20 overcharges in a 50-item lot. 

A follow-up inspection in August found an error rate of 18.33% based on 55 overcharges in a 300-item lot.

“Our Standards Division does excellent work inspecting stores across the state for scanner errors that hurt consumers’ pockets,” said Agriculture Commissioner Steve Troxler. “North Carolinians should only have to pay the price they see on the shelf and this work is vital to make sure that happens. Our Standards Division will continue to inspect stores, but consumers should also check their receipts often and notify store managers if they see an issue.”

The department conducts periodic, unannounced inspections of price-scanner systems in businesses to check for accuracy between the prices advertised and the prices that ring up at the register. 

If a store has more than a two percent error rate on overcharges, inspectors discuss the findings with the store manager and conduct a more intensive follow-up inspection later.

Undercharges are also reported, but do not count against a store.

Penalties are assessed if a store fails a follow-up inspection. In addition to the penalties paid, the store will be subject to reinspection every 60 days from the last inspection until it meets the two percent-or-less error rate. Additional penalties may be assessed if a store fails reinspection.

Chad Parker is the manager of the unit that conducts the inspections and imposes the fines. 

Could you describe for us your price scanning program?

“We go into a store and we do a fifty item random scan,” Parker told Corporate Crime Reporter in an interview last month. “We go through and pull fifty random items off the shelves. If there was one overcharge out of the fifty, that would be a two percent overcharge rate. And it has to be above two percent for us to take action. If they had two or more out of the fifty, the store would fail.”

“If the store fails, we give them a warning and after thirty days we return and do a more expanded search. It turns into 300 random items. And hopefully they would have a fail rate of two percent or less. Hopefully they would have made their corrections and would be able to pass that inspection.”

“If they still have problems and fail the 300 random test, they will be issued a fine and would be earmarked for another 300 items. And we keep following up until the store is able to pass inspection.”

When you go into a store to scan the items, do you tell the store manager first?

“Yes, we always go in and approach the manager first and tell the manager what we are there to do. Then we perform our inspection.”

Let’s say you pick up a can of soup and you scan it. You check the scanned price against the posted price on the shelf?

“Yes, the shelf price is the posted price. Sometimes it’s the advertised price or the coupon price. But most of the time it’s the shelf price. If the shelf price is a dollar and the register rings up two dollars, that’s a 100 percent overcharge.”

“We recently went to a new software that many other states are using. It’s called WinWam software. Win as in Windows and Wam as in weights and measures.”

“We have our software on our laptop. It’s connected to a handheld scanner that’s plugged into our laptop. And we go by and we pick up an item and scan that bar code. And that bar code is automatically transferred onto the software as our number one item. Then we look at the shelf price and punch that in as the shelf price.”

“Then we continue on down the line. We are manually typing in the listed price.” 

“Most of our people place the laptop on a little cart that they can roll around the store.”\

North Carolina is one of the few states putting out press releases about their findings?

“That’s accurate from North Carolina’s perspective. But I can’t say what other states are doing.”

Have you seen other states doing this?

“I have seen other state attorneys general getting involved. The attorneys general are fining these stores. They were moving against several of the dollar stores. They have been the worst of the worst.” 

I am seeing one headline titled – Ohio AG Files Temporary Restraining Order Against Dollar General for Deceptive Pricing. 

A big number of the stores you are hitting with fines are dollar stores. How do you decide which stores to randomly scan at?

“We try to get around to every major grocery store. Everybody goes to a grocery store. Everybody goes to a Wal-Mart or a Target. We try to hit all of those.” 

“In the last couple of years, consumer complaints have driven us to the dollar stores. A complaint comes in and we always check into complaints. A lot of those visits to dollar stores are driven by consumer complaints. We check on them and if they fail, we keep going back until they pass.”

Has anybody done a report on retail outlets overall and how much they are overcharging?

“We have our own data, but we don’t release all of that data.”

Have you compiled it across the board for North Carolina stores?

“I’ve been part of this section for seventeen years. I’ve been the manager for the last five going on six years.” 

“When Covid hit, everything shut down. And then inflation kicked into hyperdrive. Before that, we were averaging maybe $50,000 in penalties a year. After inflation kicked in, we ramped up to over $800,000 a year. It was right around 2021 or 2022. Inflation was really bad. And it jumped up astronomically. Now, high prices are still there, but the penalties are starting to level off.”

What is the explanation for the increase in penalties? Were the retailers taking advantage of the situation?

“My opinion is that during that time, it was very difficult to hire staff. You had a lot of stores that were understaffed. Even the people they were able to hire were not top quality. A lot of the routine work was dropped. Your managers are supposed to go out there every day and change prices. But if you don’t have a good manager, you don’t have good staff, that part of your job is not getting accomplished.”

If it’s just incompetence, you would see a wash between underpricing and overpricing.

“Not necessarily, because how often does the price drop? Not very often. Most of the time, the prices are going up, especially over the past two or three years.”

Okay, let’s say the price on a can of soup is $2.50 and it goes up to $2.70. The scanned price is $2.70. But the store manager fails to change the listed price of $2.50. So that’s an overcharge?

“Yes, the manager failed to change the price on the shelf. The listed price is $2.50, but the customer gets charged $2.70.”

Is it your view that the majority of these cases are incompetence?

“It’s a combination. During this time, maybe a store is used to making 2,000 price changes during a week. Then all of a sudden, during inflation, everything on their shelves jumps up – everything. So now they are doing 10,000 price changes per week.” 

“At some point, you don’t have the manpower to change those prices every week, when everything is going up every week. The good managers manage it the best they can. The lesser managers just throw their hands up and say – I can’t keep up.”

“But all the managers were struggling with the same problem.”

[For the complete q/a format Interview with Chad Parker, see 37 Corporate Crime Reporter 37 Corporate Crime Reporter 40(12), October 16, 2023, print edition only.]