Consumer Protection Act of 1999

DATE: January 12, 1999 
TO: Board of Supervisors 
SUBJECT: CONSUMER PROTECTION ACT OF 1999

SUMMARY:
Automated price scanning mistakes cost California consumers over $250 million annually. Department store overcharges alone cost San Diego County consumers more than $33.5 million last year. Currently, there is no statewide system in place for monitoring scanner accuracy. Adoption of the attached ordinance will require all County retailers employing automated price scanning devices to register their scanners with the County and will authorize County staff to periodically test the systems for accuracy.

Recommendation:
SUPERVISOR DIANNE JACOB 
1. Read Title and waive further reading: 
AN ORDINANCE OF THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ADDING CHAPTER 20 TO DIVISION 1 OF TITLE 2 OF THE SAN DIEGO COUNTY CODE OF REGULATORY ORDINANCE, RELATING TO CONSUMER PROTECTION.

Introduce ordinance for adoption on February 2, 1999. (Attachment A)

2. Amend the Resolution establishing a schedule of fees for the Department of Agriculture, Weights, and Measures to reflect the addition of item XIX - Point-of-Sale Station Permit. (Attachment B)

3. Direct the Chief Administrative Officer to make available to the public a list of retailers whose scanners fail to meet the County's accuracy requirements.

Fiscal Impact:
The costs and offsetting revenue for this proposal are budgeted in the Department of Agriculture, Weights, and Measures' FY 1998-99 Adopted Budget. Adoption of this ordinance will result in annual costs of $245,000, including internal and external overheads, which is fully offset by permit fees.

Business Impact:
Verifying scanner accuracy at the outset will save businesses direct costs resulting from undercharges as well as potential penalties and fines for overcharging customers. Fees for registering scanner devices will be collected from businesses using a sliding scale based on the number of scanners employed at each location. Businesses of 3,500 square feet or less which have already registered with the County will not be charged a fee. The maximum annual fee that a business would be required to pay is $75. (Attachment C)

BACKGROUND
According to a 1996 survey conducted by the California Department of Food and Agriculture, automated price scanner overcharges have cost California consumers over $250 million annually. Additional research has shown that the percentage of scanner overcharges has almost doubled since the completion of the 1996 survey. An investigation conducted by the County Department of Agriculture, Weights, and Measures found that San Diego County consumers were overcharged more than $33.5 million last year in department store purchases alone. Since there is no statewide system in place for monitoring scanner accuracy, stores are essentially left to regulate themselves. This leaves the burden of catching overcharges resting entirely with consumers, most of whom never realize they are being overcharged.

Although legislation to require the regular inspections of scanners was introduced during the last legislative session, supporters were unable to pass a bill establishing a scanner monitoring system. The Fiscal Year 1998-99 state budget includes some funding for state oversight of scanner activities, but no money for local scanner overcharge investigations was identified. Even in the absence of state funding, the County of San Diego has undertaken the task of performing random inspections to test local retail and supermarket scanner accuracy. Inspections are also conducted when complaints are filed with the County's Department of Agriculture, Weights, and Measures. County staff were overcharged for 195 purchases during their inspection of 521 stores.

County Counsel has determined that enactment of a local scanner registration ordinance to protect consumers would be within the County's jurisdiction. I am, therefore, proposing the adoption of an ordinance to require all automated price scanners to be registered with the County Department of Agriculture, Weights, and Measures. Under the ordinance, County staff will also routinely monitor scanners for accuracy similar to the inspection method used to determine the accuracy of gas station pumps.

County Department of Agriculture, Weights, and Measures staff will use an Inform, Warn, and Act method to enforce pricing accuracy. First, all affected businesses will receive information concerning changes resulting from the adoption of this ordinance through direct mailings. Should a violation of pricing accuracy occur, a warning will be issued in the form of a Notice of Violation (NOV) which provides an opportunity for corrective action. If an additional violation occurs, County staff can impose fines and charge violators with a misdemeanor until the violation is corrected. Under this proposal, the County will also make available to the public a list of any store locations which fail the County's scanner inspection program in order to protect local consumers.

Respectfully Submitted,

DIANNE JACOB
Supervisor, Second District