Family Dollar has agreed to pay $63 million to settle allegations that it routinely overcharged customers by millions of dollars.

The Federal Trade Commission and 17 U.S. states accused the budget retailer of failing to honor prices displayed on store shelves, on price tags and in advertisements.

A proposed order bans Family Dollar from misleading customers on prices and requires the company to adopt what the FTC described as a "pricing accuracy program" that is independently assessed and certified annually.

"Today's order will ensure Family Dollar stops deceiving consumers about its prices and returns money to consumers harmed by these practices," Christopher Mufarrige, director of the FTC's Bureau of Consumer Protection, said in a statement on Thursday.

Family Dollar operates more than 7,000 stores across 48 U.S. states and Washington, D.C. The Chesapeake, Virginia-based company did not immediately respond to a request for comment on the settlement.

The FTC and the states' complaint alleged that pricing inaccuracies are widespread at Family Dollar stores and that the retailer failed to correct errors. Customers regularly reported being charged higher prices at the register than those displayed on goods' price tags, in stores, on the retailer's website and in its mobile app, according to the complaint.

The states include Alabama, Arkansas, Colorado, Florida, Iowa, Illinois, Kansas, Louisiana, Mississippi, Nebraska, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Utah and Wisconsin.

In October, the FTC and 20 states sued another discount retailer, Dollar General, over allegations of similar deceptive pricing practices. The litigation is ongoing.

Customer refunds and discounts

The proposed order requires Family Dollar to establish a $40 million fund to compensate eligible customers.

The retailer will notify customers of their eligibility for reimbursement through in-store notices and online. Eligible customers include anyone who made a purchase at a Family Dollar store from Jan. 1, 2023, to Oct. 1, 2026.

The order also establishes a separate $20 million discount program for customers. Under the program, Family Dollar must offer customers 15% off a range of goods for two days. State plaintiffs will receive $3 million to be divided among them.

The retailer must create a pricing accuracy program to ensure that it regularly monitors and verifies prices and trains employees to identify and correct pricing discrepancies.