Price gouging – what you should know

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Price tag on toilet paper
An example of price gouging occurs when prices are raised more than 10% for essential goods, such as toilet paper. Anza Valley Outlook/Courtesy photo

As the coronavirus sweeps across the nation and the world, so does unscrupulous profiteering by some businesses, representing a clear violation of the public trust.

Taking advantage of consumers during a crisis is nothing new. Even in ancient times, governments combated price gouging, profiteering and price discrimination by passing laws to protect their citizens against dishonest sellers. Price gouging was and still is considered exploitative and unethical.

Price gouging is illegal in California and occurs when a person or business takes advantage of buyers by raising prices more than 10% for essential goods or services during a declared state of emergency. California Gov. Gavin Newsom declared a state of emergency statewide March 4, putting price gouging laws into effect.

Essential goods and services include food, water, food and water for pets, flashlights, medicine, sanitary products, toiletries, diapers, medical or emergency supplies and lodging.

Those who price gouge are subject to criminal prosecution that can result in up to a year in county jail and/or fines up to $10,000. There may also be civil penalties including a fine of $5,000 per violation, restitution to the victim or victims, and a court order to cease the illegal actions.

Riverside County district attorney Mike Hestrin warned all business owners and those who provide services to the public that price gouging will not be tolerated during the current state of emergency due to the COVID-19 coronavirus health crisis, according to a press release from the district attorney’s office.

“The district attorney’s office will be vigilant in protecting the public and consumers during this health crisis,” Hestrin said.

Thirty-four states have laws against price gouging, and these are held as a valid exercise of police power to preserve order during an emergency and may be combined with anti-hoarding mandates as well.

Statutory prohibitions on price gouging become effective once a state of emergency has been declared. States have legislated different requirements for who must declare a state of emergency for the price protections to go into effect. California permits emergency proclamations by officials, boards and other governing bodies of cities and counties to trigger the state’s price gouging law.

California Penal Code 396 prohibits price gouging, generally defined as anything greater than a 10% price increase once a state of emergency has been declared. The price protection lasts for up to 30 days at a time and may be renewed as necessary. In October 2017, former Gov. Jerry Brown repeatedly extended the price-gouging ban for counties impacted by the October wildfires and later for those affected by the 2018 blazes.

However, California has virtually no price monitoring oversight. Law enforcement relies on citizen reports to discover exploitative pricing practices.

If you suspect a business or person of price gouging, you may submit a complaint form found on the state attorney general’s office website at: https://oag.ca.gov/contact/consumer-complaint-against-business-or-company.

Diane Sieker can be reached by email at dsieker@reedermedia.com.