Noah Colvin drove over 1,000 miles across Tennessee and into Kentucky and purchased 17,700 bottles of hand sanitizer and thousands of packs of antibacterial wipes before he was forced to donate it all. Amazon quickly removed Colvin’s items and thousands of other listings for sanitizer, wipes and face masks. eBay also banned any U.S. sales of masks or sanitizer.
Stores across the country are now rationing supplies like toilet paper, paper towels, hand sanitizer, and antibacterial wipes and many consumers face chronically empty shelves.
Tennessee, where Mr. Colvin lives, has a price-gouging law that bars people from charging “unreasonable prices for essential goods and services, including gasoline, in direct response to a disaster.” The Tennessee attorney general’s office has since sent Mr. Colvin a cease-and-desist letter.
Price gouging refers to sellers trying to take unfair advantage of consumers during an emergency or disaster by greatly increasing prices for essential consumer goods and services.
However, some of the sellers who marked up prices of masks and sanitizer defended themselves, arguing that they should be compensated for their labor in getting much needed supplies from low-demand areas of the country to high-demand area.
New York’s law prohibits sellers from charging an “unconscionably excessive price” during emergencies.
California’s anti-price gouging statute, Penal Code Section 396, prohibits raising the price of many consumer goods and services by more than 10% after an emergency has been declared.
The state of emergency is declared by the President of the United States, the Governor of California, or any city or county executive officer. Individuals, businesses, and other entities must comply with the statute.
California’s anti-price gouging law applies to the following major necessities:
lodging (including permanent or temporary rental housing, hotels, motels, and mobilehomes);
food and drink (including for animals);
emergency supplies such as water, flashlights, radios, batteries, candles, blankets, soaps, diapers, temporary shelters, tape, toiletries;
medical supplies such as prescription and nonprescription medications, bandages, gauze, isopropyl alcohol, and antibacterial products;
home heating oil; building materials, including lumber, construction tools, plywood, nails, and hammers and windows;
transportation; freight; storage services;
gasoline and other motor fuels; and repair and reconstruction services.
The statute generally applies for 30 days after a declaration of emergency, but state and local officials may extend the effective period of the statute by additional 30-day periods.
California’s price-gouging statute generally prohibits landlords from increasing the price of rental housing by more than 10% of the previously charged or advertised price. For rental housing that was not rented or advertised for rent prior to a declaration of emergency, the price cannot exceed 160% of the fair market value of the rental housing as established by the U.S. Department of Housing and Urban Development.
Violations of the price gouging statute are subject to criminal prosecution that can result in one-year imprisonment in county jail and/or a fine of up to $10,000. Violations are also subject to civil enforcement actions including civil penalties of up to $5,000 per violation, injunctive relief and mandatory restitution.
You can report suspected price gouging to local police or to the California Attorney General which may, on behalf of the public, investigate or prosecute someone who has engaged in price gouging.
What do you think? Are the price gouging laws too strict or are they an absolutely necessity during emergencies like the Coronavirus pandemic?