Thrifty Chain Pays $118,000 in False Ad Settlement

After negotiating for more than a year with officials from the district attorney’s office over allegations of false advertising, the giant Thrifty Drug store chain agreed Tuesday in Los Angeles Superior Court to pay almost $118,000 in civil penalties.

Although it is the third time in recent years that the drug retailer has agreed to pay such fines, Thrifty officials blamed any overcharging on “inadvertent errors.” Company officials also agreed, however, to implement an unprecedented series of steps aimed at eliminating further problems with pricing and overcharging.

The case against the drug corporation--operators of almost 500 Thrifty Drug & Discount Stores and Thrifty Jr. outlets statewide--was prompted by a complaint almost two years ago from an official of the county Department of Consumer Affairs.

Deputy Dist. Atty. Martin Herscovitz said a woman complained that her neighborhood drugstore often sold advertised sale items at their higher, regular prices.

Subsequently, a team of investigators from the district attorney’s office and the Department of Consumer Affairs fanned out across Los Angeles County, visiting more than 100 Thrifty stores and surveying more than 12,000 items.

Completed in June, 1986, the six-week shopping survey showed that almost 38% of the items advertised in newspapers as being “on sale” actually were marked at regular prices, Herscovitz said.

Moreover, more than 60% of the items ultimately purchased by the investigators were sold at the higher prices.

“We looked at the items we thought would have the biggest turnover, the ones that people regularly went to Thrifty to buy--shampoo, hair spray, cleaners, small sundry items that usually sold for less than $2,” Herscovitz said.

“We found a pattern of overcharging . . . in respect that we found it at so many of the stores,” he said.

Gary Meade, the attorney for Thrifty, said the company does not believe that the “surveys taken by the D.A.’s office are at all representative of the thousands of transactions in our stores. Nor do we believe that any inadvertent errors violated the law.

“We agreed to the settlement to avoid the burden and cost of litigation.”

Besides paying the fine, Thrifty will also spend an estimated $150,000 in a new program to eliminate incorrectly marked items.

Among other things, the drug retailer must have each of its store managers verify that all sale merchandise is properly stickered, must initiate a program of spot checks by district managers and must hire an outside marketing firm to conduct once-a-month random inspections.

“In the past, we have relied on their good words to comply with the law,” Herscovitz said, referring to similar complaints against Thrifty in 1974 and 1979. In those cases, the corporation paid fines totaling $85,000.

“That has been ineffective. . . . This is a novel approach of forcing them to solve the problem. . . . It’s going to cost them to take affirmative steps to remedy it,” he said. “Thrifty believes it will work and we believe it will solve the problem.”

Under the court settlement, Thrifty must maintain the new policy for five years.