When Hurricane Matthew was about to make its journey up the East Coast, residents knew what they had to do: Stock up. They cleared shelves of bread and milk and, in some cases, emptied gas stations of their fuel.
Shortages in a crisis may tempt unscrupulous business owners to jack up prices. While some price fluctuation is to be expected at any time, huge hikes may be deemed “price gouging,” which is illegal.
There were more than 2700 price gouging complaints to the Florida Attorney General’s Office from Hurricane Matthew within a few days of the storm, according to a report in the Orlando Sentinel. Most of the complaints — 1500 — concerned fuel.
It’s wise to avoid making precipitous hikes in prices, even if there is a shortage in gas. But whether a service station is actually engaged in price gouging can be a judgment call.
In Florida, authorities look at the average price of a product for 30 days leading up to a declaration of a
state of emergency by the governor. If the new price “grossly exceeds” that average price — and the hike can’t be explained by market trends outside of the influence of the emergency — then a business can be accused of price gouging.
The law says: “Upon a declaration of a state of emergency by the Governor, it is unlawful and a violation of s. 501.204 for a person or her or his agent or employee to rent or sell or offer to rent or sell at an unconscionable price within the area for which the state of emergency is declared, any essential commodity including, but not limited to, supplies, services, provisions, or equipment that is necessary for consumption or use as a direct result of the emergency.” The prohibition is in effect for no more than 60 days after the emergency is declared, unless the state of emergency is renewed.
The statute in Florida covers only essential commodities, of which fuel certainly is one. So are food, water, ice, chemicals and lumber essential during an emergency. Alcohol and cigarettes, on the other hand — though perhaps in demand — are not labeled as commodities and therefore aren’t covered by the law.
Consumers and officials have to collect evidence of the gouging, including receipts, descriptions of possibly extraneous charges, and information on the product at issue. Violations “may be enforced by the office of the state attorney or the Department of Legal Affairs,” the law says.
Penalties may include fines of $1000 per violation, with a total not to exceed $25,000 in a 24-hour period. It’s also a second-degree misdemeanor for someone to offer goods and services for sale to the public during a state of emergency without an occupational license, according to the Florida Bar.
An article in its journal has called for a more specific definition of “gross disparity,” to make violations more clear. It reported that during the 2004 hurricanes, the attorney general’s office received almost 9000 reports of price gouging.
Price gouging laws and punishments vary by state. In Georgia, the Department of Law’s Consumer Protection Unity may investigate allegations of illegal pricing. Violators face fines of $2000 to $15,000 per incident. In South Carolina, price gouging is a misdemeanor punishable by up to a $1000 fine and/or 30 days in jail.