For many people, pennies have become a nuisance. Vending machines and parking meters will not accept them, and in the last decade, two bills were introduced in the United States House of Representatives to do away with the nation’s smallest currency.

A sign posted at the 99 Cents Only store on Wilshire Boulevard clearly states that the prices have increased by a penny. (photo by Ian Lovett)

For the 99 Cents Only Store, however, a penny could cost a pretty penny.

For 26 years, the 99 Cents Only Store never charged more than 99 cents for any product. But in the summer of 2008, the City of Commerce-based chain raised its prices by almost a penny to 99.99 cents, which cash registers round up to $1.

Now, the company faces two class-action lawsuits, which allege that the change in price amounts to false advertising for a store whose name implies a price of only 99 cents.

“This is a false advertising case,” said Edward Susolik, an attorney with Callahan & Blaine, the firm that brought the lawsuits. “From 1982 to 2008, 99 Cents Only Stores always said nothing costs more than ninety-nine cents, ever. When they made the change, they put a little .99 in extremely small text in ads and on price tags. That’s misleading to virtually every person who shops there.”

Eric Schiffer, chief executive at the 99 Cents Only Store, said the company went to unprecedented lengths to inform the public about the price change.

“I don’t think any retailer in the history of retailing did what we did,” Schiffer said. “We called a press conference at our Beverly Hills location and invited all the media. We issued news releases announcing our price increase. We put up large posters, changed price signs, put up recorded announcements. It was national news. It was even in the Times of London and newspapers in China. Can you think of any other retailer who went through so much trouble to tell the public they were raising prices?”

Schiffer said that after 26 years of inflation and cost increases, the price raise was necessary to keep the company profitable. He said stores have received few complaints, and sales have actually increased during the last two years, with more people looking for bargains since the recession began.

“A one percent price increase in twenty-eight years is not too shabby,” Schiffer said. “We’re still staying true to our core concept, which is for everything we carry to be a good or great value for our customers.”

Jack Kyser, chief economic advisor for the Southern California Association of Governments, said the lawsuit will have economic implications for other bargain stores, like Dollar General and Family Dollar.

“It’s not to say a store can only charge 99 cents. Sooner or later the product array would have to disappear,” Kyser said. “They’re in a very competitive retail segment. Every time you turn around, you see a new dollar store. There are very low profit margins in this business, so this could be a very important legal case. I’m sure a lot of other bargain stores are watching very, very carefully.”

Bob Rasmussen, Dean of the University of Southern California Gould School of Law, said that for the plaintiffs to win the case, they will have to prove two things: first, that everyone who walks into the store has been led to believe that no product ever costs more than 99 cents; and second, that once inside the store, the advertising is deceptive.

“I think it’s a pretty aggressive suit,” Rasmussen said. “I’ve gone to Dollar General, and even though dollar is in the name, some things cost more than a dollar. I think most people kind of realize that the price in the store name is generally true but not always true.  Even if you get into the store thinking the price is 99 cents, if you see that it’s a dollar you can always put the item down, and you haven’t been harmed. They have to show that the store hid the price from customers. I’d say it has less than a 20 percent chance of proving all that.”

Susolik said that before the lawsuit was filed, his firm conducted a survey to see how many of the 99 Cents Only Store’s customers knew about the price increase. He called the results “virtually unanimous” — all of the customers thought the store’s products cost 99 cents.

At the 99 Cents Only Store on Wilshire Boulevard, customers were better informed. About half of the customers going in and out of the store on Tuesday afternoon had known about the price increases, though one customer said she only found out last week when she heard about the lawsuit.

Rose Appelbaum said she comes to the 99 Cents Only Store for just about everything.

“I’ve known about it for a while, since the price went up two years ago,” Appelbaum said. “Back in the Midwest, we had dollar stores, and now this is basically a dollar. I’m a low-income senior. I don’t know what I’d do without the 99 Cents Store.”

Even those who hadn’t known about the new price, however, were not bothered by the increase. Richard Garcia said he hadn’t realized the price was no longer 99 cents, but he would continue to shop there.

“Here, a dozen eggs cost a dollar now,” Garcia said. “At Ralph’s, they’re more like $1.29. This is still the best value of anywhere around.”