Kelly-Moore pays for overcharges

SAN CARLOS (Map, News) - National paint chain store Kelly-Moore, based in San Carlos, agreed to pay $568,000 in civil penalties after the company was found to have charged customers more than the posted price for items at its stores.

Kelly-Moore Paints admitted no wrongdoing, but agreed to pay $568,138. The long-existing problem likely was caused by inadequate checkout equipment at its stores throughout the state, said officials from San Mateo County Superior Court, where the complaint was filed said.

Customers had been overcharged “a few cents to more” compared with the price posted in the store, said John Wilson, the deputy district attorney in charge of the case. District attorneys from Alameda, Santa Clara and Santa Cruz counties, along with state officials, conducted the investigation last year, citing regular problems from the previous three years, he said.

Wilson said it was impossible to know how many customers were overcharged, or by how much, so $400,000 of the fine was paid as a civil penalty, and most of the rest of the settlement will go toward reimbursing investigators who worked on the case.

“We alleged that overcharges rose to the level where there was a pattern,” Wilson said. “It was not an intentional business practice.”

The company also has made “substantial changes” to its procedures for tracking and changing prices, Wilson said.

Furthermore, the company will post signs for the next five years by its checkout stands letting customers know they will receive a $5 discount if they pay more than the posted price. If the cost of the product is less than $5, it will be free.

Kelly-Moore President Steve Devoe said the company also undercharged customers because of its equipment and added that contractor business, which composes 85 percent of the company’s transactions, were not affected.

“This was never an intentional situation that the company created,” Devoe said. “It was a result of outdated equipment.”

Devoe said the company realized the equipment was faulty six years ago and has since been working to replace it. In addition, some human error may have been involved if employees placed items on shelves in a spot that did not correspond with posted prices, he said.

Kelly-Moore has 90 California stores, including six in San Mateo County, and 170 across the nation.

mrosenberg@sfexaminer.com

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