News: Analysis & Commentary: Investigations
MAYBE THEY SHOULD CALL THEM `SCAMMERS'
Hercule Poirot has nothing on Inspector Robert W. Alviene. It's just after Christmas, and Alviene, an official with the Morris County Office of Weights & Measures, is walking the aisles of a Bradlees Inc. store in East Hanover, N.J., dropping items into his shopping cart. He isn't looking for post-Christmas bargains. He wants to know if Bradlees' electronic checkout scanning system is overcharging customers.
Sure enough, for the third time in three months at this store, Alviene finds mistakes at the checkout. A $21.99 set of bedsheets scans at $29.99, and a $3.99 rawhide dog bone costs 50 cents more than it should. In all, six of the 17 items in his cart have the wrong price in the scanner, resulting in an overcharge of $12.30 on a $161.85 total purchase (table). A Bradlees spokesman calls the results "troubling" but denies that the company intentionally bilks anyone. All the same, says Alviene, "the customer is really getting burned in there."
Alviene's shopping trip, expected to produce a fine for the store, is the latest in a nationwide crackdown on scanner overcharges. A Dec. 14 survey by Vermont's attorney general found that local outlets of Ames Department Stores Inc. and Rich's Department Stores had serious errors in their scanning systems. Two days later, Michigan Attorney General Frank J. Kelley announced similar findings at Sears, Roebuck & Co. and Wal-Mart Stores Inc. And J.C. Penney Co. is in settlement talks with San Diego County over its alleged mispricing. The Federal Trade Commission is now working to coordinate the proliferating state and local probes.
Authorities and the retailers say mistakes are a result of human error, not fraud. They say the lapses occur when store clerks fail to enter correct data into scanner computers, especially when prices change. Still, experts believe that the impact, which no one has tallied, is enormous. "It's a serious national problem," says Ken Butcher, weights and measures coordinator at the National Institute of Standards & Technology.
TO ERR IS COMMON. Investigators are focusing on nonfood retailers--such as discounters and department stores--which recently started using scanning technology. Although the technology is capable of 100% accuracy, some stores average as low as 85%, says Butcher. And the mistakes often favor retailers. A California survey of 9,000 items from 300 stores found overcharges on 2% of the products and undercharges on 1.3%. A Michigan study found a 4-to-1 ratio of overpricing to underpricing. "It's one of the few places you can be negligent and make money," says Michigan Assistant Attorney General Frederick Hoffecker.
Retailers staunchly defend the systems, noting that scanners are more accurate than clerks--who punch in the wrong prices about 10% of the time, according to NIST estimates. Some companies also say the issue is being blown out of proportion. "There are a number of individuals around the country who are always looking for ways to achieve instant press, and scanning accuracy seems to be a hot button right now," says a Wal-Mart spokesman.
True, regulators' sampling methods may be skewing their results: By relying heavily on sale items that have frequent price changes, the surveys suggest an inflated error rate, retailers say. Yet consumer advocates argue that high-volume sale items are where most rip-offs are likely to occur. "If a customer shoplifts, it's called a crime," gripes Pennsylvania consumer advocate Mary Bach. "But a store can `shopper-lift,' and it's called a mistake."
To complicate matters, scanners' speed and the disappearance of price tags make it hard to detect errors. "I keep my eye on the prices when they light up after they get scanned," says Carol Hennessey, a 53-year-old office-supply-store employee as she waits in line at a supermarket in Morris Plains, N.J. Hennessey says she has caught several stores mischarging her, "but you've got to wonder how many times you don't catch it."
To combat pressure from law-enforcement agencies, some retailers have launched programs to improve their scanning systems. As part of a $985,000 settlement in May with San Diego County, Kmart Corp. designated a manager in each store nationwide to make sure prices in scanning computers match those advertised. Rich's Department Stores is mulling a similar move. Bradlees charges the correct amount when a mistake is brought to its attention. Some stores go further. Sears, which says it has a 95% accuracy rate, rebates $5 or 5% off mischarged items, whichever is more. And Wal-Mart gives a $3 refund per item.
That's scant comfort, however, for customers who think they've been had but can't prove it. For now, keep track of shelf prices, and hold on to your receipts. Inspector Alviene and his cohorts could be coming to a store near you soon.By Catherine Yang in Washington, with Willy Stern in Morris County, N.J., and bureau reports