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What Is Price Gouging?
by Attorney General Eliot Spitzer
One of the great traditions of our nation is that in times of trouble, Americans naturally band together. We witnessed this on September 11th. In addition to the extraordinary acts of heroism and bravery by emergency service personnel, there were countless examples of ordinary New Yorkers helping each other.
I saw it firsthand. When my office was evacuated, my staff and I were among the thousands of people making their way to safety through the cloud of dust and debris. As terrible as that day was, it will always be a source of inspiration for me to remember how people aided each other. If someone stumbled, there was a hand outstretched to help. When people became distraught, there were comforting words.
One of the most amazing things that happened was the way in which business owners responded. Many of them simply closed the cash register and began handing out water, juice and coffee, towels, and anything that could help.
This wonderful spirit of cooperation and selflessness by business owners stands in sharp contrast to the actions of a handful of others who tried to profit from the tragedy. These business owners and operators used the tragedy as an excuse for raising prices of goods and services.
New York State law prohibits price gouging during a state of emergency. The law specifically provides that, in order to prevent any party from taking unfair advantage of consumers during an abnormal disruption of the market, the charging of "unconscionably excessive" prices is prohibited.
This law protects consumer goods and services vital and necessary for the health, safety and welfare of consumers and applies to all parties in the chain of distribution. The statute covers basic foods like bread and milk, as well as services such as emergency home repairs. My office is empowered to investigate and prosecute violators, and may seek civil penalties of up to $10,000.
In the weeks after the terrorist attacks, my office investigated a number of complaints of price gouging. Frankly, I would have liked to prosecute more of these cases, but the law, as noted, is very specific. Not all prices increases violated the law. Other times, it was difficult to prove the violation.
One case where my office was successful involved a Long Island hotel that more than doubled room rates immediately after the attack. Customers who were stranded after air travel was suspended at New York’s airports had no choice but to pay the increased price. My office sued the hotel. The company that owned the hotel later settled the case, and agreed to make refunds to customers and pay $9,500 in civil penalties.
My office can and does investigate reports of price gouging across the state. For example, my Buffalo regional office is reviewing complaints of price gouging after the massive snow storm last month. For example, we have received reports that snow plow operators suddenly increased prices in violation of existing contracts with homeowners.
In other emergency situations, the office has investigated allegations that the prices of electric generators, food and even drinking water had been raised to unconscionable levels.
If you believe you have been charged excessive prices during an emergency situation, please contact the Attorney General’s office at 800-771-7755 or www.oag.state.ny.us to file a complaint.
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