Maybe there's hope yet ... Michigan Sues J.C. Penney Over Price Scanning
NEW YORK (Reuters) - The State of Michigan is suing J.C. Penney Co. Inc., charging the No. 4 U.S. retailer with deceptive sales practices after an in-state survey found Penney's check-out scanners were wrong on a third of purchases of on-sale items, the state attorney general's office said.
The Michigan Attorney General's Office surveyed 19 stores, including four J.C. Penney (NYSE:JCP - news) department stores, and found an overall scanner error rate of 16.8 percent, an increase over the prior two years.
The survey also found that 85 percent of the scanner errors were overcharges that are unfavorable to customers.
Officials focused on goods that were on sale, since those items are used to draw customers to stores and also show most of the scanning errors, the attorney general said.
In the survey, J.C. Penney, which has 1,150 department stores nationwide, inaccurately scanned 18 of 54 items purchased, the attorney general's office said.
This topped Hudson's (NYSE:DH - news) and Sears (NYSE:S - news), which made errors in 11 of 59 items and 11 of 63 items, respectively. Mistakes were found in 26.7 percent of the 15 sale items scanned at Montgomery Ward, but one of the four mistakes was an undercharge.
Target had two overcharges of the 30 sale items purchased and Mervyn's had one undercharge of the 32 items purchased.
J.C. Penney spokesman Duncan Muir said J.C. Penney has not yet seen the lawsuit, but acknowledged that the scanning mistakes came from ''human error'' by leaving promotional signs up too long.
The Plano, Tex.-based retailer said in a statement issued on Tuesday that it works ''diligently'' to ensure customers are getting the correct price and that it is disappointed with the results of the survey.
''Over the past several years we have built a cooperative relationship with the Michigan Attorney General's office,'' the retailer said. ''On more than one occasion, we have made our stores available for the training of the Attorney General's inspectors. We expect to address their current concerns in the same spirit of cooperation.''
In this year's survey, J.C. Penney, Hudsons, Mervyn's, Montgomery Ward (NYSE:GE - news), Sears, Kohl's (NYSE:KSS - news), and Target stores were surveyed. In 1998, 15 percent of items purchased showed scanner errors and 13 percent showed errors the prior year.
In the holiday season of 1996, scanner mistakes appeared in 19.8 percent of sale items purchased in the survey.
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