The Federal Trade Commission said Monday that it filed a lawsuit along with 20 states accusing Dollar General of charging customers more than the prices it displays on shelves, price tags and in advertisements.
Shares of Dollar General dropped about 4% after the FTC announced the lawsuit.
The complaint alleges that thousands of Dollar General stores have "taken advantage of vulnerable shoppers by extracting millions of dollars in unlawful overcharges with insufficient safeguards to prevent the practice."
It also argues that Dollar General has received "tens of thousands" of complaints from consumers about charging higher than advertised prices, but that it has not implemented policies to address the problem.
The states joining the FTC in the lawsuit are Alabama, Arizona, Arkansas, California, Connecticut, Florida, Illinois, Iowa, Kansas, Louisiana, Michigan, Mississippi, Nebraska, New Jersey, North Carolina, Ohio, Oklahoma, Tennessee, Utah and Wisconsin.
"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 of the FTC's Bureau of Consumer Protection.
Dollar General did not immediately respond to a request for comment.
The suit comes as shoppers look for discounts while they face elevated food and gas prices. Officials across the political spectrum also aim to show their efforts to protect consumers from high costs ahead of the midterm election next week.