SAN FRANCISCO (KPIX 5) — The government watchdog that is supposed to ensure consumers are not overcharged at the grocery store has stopped doing its job. KPIX 5 ConsumerWatch has learned the state’s Price & Quantity Verification Program has been shut down, pending closed door meetings with the grocers and retailers it is supposed to be regulating.

Investigations by the state’s Price & Quantity Verification program have led to dozens of lawsuits against nationwide retailers, amounting to millions of dollars in fines and fees. Not only did the lawsuits serve as a deterrent for overcharging, but they often result in new consumer protections.

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A 2008 lawsuit against Safeway included an injunction that now requires the store to provide most overcharged items for free (items overcharged more than $5 are subject to a $5 gift card).

Similar injunctions were recently issued in settlements with other retailers including CVS, Walgreens, Fresh and Easy, Staples, and Wal-Mart. But these lawsuits may be the last of their kind.

Following cuts to the state’s general fund, California Department of Food and Agriculture Secretary Karen Ross convened a Weights and Measures-specific consortium to decide which programs should face funding cuts and which, if any, should be defunded completely.

The consortium, including representatives from Wal-Mart, The California Grocers Association, California Retailers Association, and Proctor and Gamble, chose to defund the Price Quantity Verification program that had previously led to numerous lawsuits against its members.

The groups are now meeting to debate whether to fund the programs themselves with industry-paid fees. The state has denied KPIX 5 access to those meetings.

Director of Measurement Standards Kristin Macey said the industry groups that were hand picked by Ross need privacy to speak freely. “They’re helping to work with us to replace the general funds that were lost,” said Macey.

While Macey and other state representatives defend the industry groups and insist that they are actively working to fund the program, sources inside the consortium said before they agree to fees, some industry representatives want to water down regulations.

The requested tradeoffs include increasing the acceptable error rate to one in 50 items. Currently any overcharge is against the law. They also want to put an end to the statewide lawsuits for overcharging.

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Internal memos revealed the California Grocers Association and the California Grocery Manufacturers Association have been “vocal opponents” of the program.

Representatives from the California Grocers Association declined to speak on camera.

In a statement they said: “We appreciate the opportunity to provide input”… and “look forward to future discussion.”

Macey denies industry opposition. “They’ve been very supportive,” said Macey.

However, she made contradictory statements in a speech at a Weights & Measures conference last month. Macey was quoted as saying “The Grocers Association refused to discuss any funding” and that they believed “they were capable of policing themselves.”

When asked if she believed the grocers association is capable of policing themselves, Macey responded, “Well, obviously the lawsuits…referenced indicate otherwise.”

While 21 of 58 California counties have local Weights and Measures departments which can still investigate overcharges at individual stores, their fines are capped at $1,000. Investigators said many stores consider that a cost of doing business and are not motivated to make meaningful changes based on $1,000 fines.

The law that allows the state to investigate overcharges expires later this year.

As a result of the KPIX 5 investigation, California State Senator Jerry Hill is now authoring legislation that could increase the county fees and penalties to help fund the state program. Hill expects industry opposition to the legislation.

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