Protection from Price Gouging During Emergencies Act

Summary: The Protection from Price Gouging During Emergencies Act deters price gouging during a declared state of emergency by placing a percentage limit on the amount that certain products and services can increase in price.

This model is based on California AB 2820, enacted in 2016, which places a percentage limit on price increases during an emergency. Six other states use a percentage limit to address price gouging: AR, CA, ME, NJ, OK, OR and WV. Seven states outright ban an “increase” in price during emergencies: CT, GA, HI, KY, LA, MS and UT. And 16 states have a ban on “unconscionable” price increases during emergencies: AL, FL, ID, IN, IA, MA, MO, NY, NC, PA, SC, TN, TX, VT, VA and WI.

The “unconscionable” standard is difficult to enforce, so policymakers in those states might consider tightening their law to a percentage limit.

SECTION 1. SHORT TITLE

This Act shall be called the “Protection from Price Gouging During Emergencies Act.”

SECTION 2. FINDINGS AND PURPOSE

(A) FINDINGS—The legislature finds that:

  1. During a state of emergency or local emergency, including, but not limited to, an earthquake, flood, fire, riot, storm, drought, plant or animal infestation or disease, or other natural or manmade disaster, some merchants have taken unfair advantage of consumers by greatly increasing prices for essential consumer goods and services.
  2. While the pricing of consumer goods and services is generally best left to the marketplace under ordinary conditions, when a declared state of emergency or local emergency results in abnormal disruptions of the market, the public interest requires that excessive and unjustified increases in the prices of essential consumer goods and services be prohibited.
  3. It is the intent of the Legislature in enacting this act to protect citizens from excessive and unjustified increases in the prices charged during or shortly after a declared state of emergency or local emergency for goods and services that are vital and necessary for the health, safety, and welfare of consumers.

(B) PURPOSE—This law is enacted to protect the welfare of state residents during emergencies.

SECTION 3. PRICE GOUGING

After section XXX, the following new section XXX shall be inserted:

(A) DEFINITIONS—In this section:

  1. “Building materials” means lumber, construction tools, windows, and anything else used in the building or rebuilding of property.
  2. “Consumer food item” means any article that is used or intended for use for food, drink, confection, or condiment by a person or animal.
  3. “Emergency supplies” includes, but is not limited to, water, flashlights, radios, batteries, candles, blankets, soaps, diapers, temporary shelters, tape, toiletries, plywood, nails, and hammers.
  4. “Gasoline” means any fuel used to power any motor vehicle or power tool.
  5. “Local emergency” means a natural or manmade emergency resulting from an earthquake, flood, fire, riot, storm, drought, plant or animal infestation or disease, or other natural or manmade disaster for which a local emergency has been declared by an official, board, or other governing body vested with authority to make such a declaration in any locality.
  6. “Medical supplies” includes, but is not limited to, prescription and nonprescription medications, bandages, gauze, isopropyl alcohol, and antibacterial products.
  7. “Repair or reconstruction services” means services performed by any person who is required to be licensed under the [state law] for repairs to residential or commercial property of any type that is damaged as a result of a disaster.
  8. “State of emergency” means a natural or manmade emergency resulting from an earthquake, flood, fire, riot, storm, drought, plant or animal infestation or disease, or other natural or manmade disaster for which a state of emergency has been declared by the President of the United States or the Governor.
  9. “Transportation, freight, and storage services” means any service that is performed by any company that contracts to move, store, or transport personal or business property or that rents equipment for those purposes, including towing services.

(B) PROHIBITION ON PRICE GOUGING

  1. Upon the proclamation of a state of emergency declared by the President of the United States or by the Governor, or upon the declaration of a local emergency by an official, board, or other governing body vested with authority to make such a declaration in any county, city, or city and county, and for a period of 30 days following that proclamation or declaration, it is unlawful for a person, contractor, business, or other entity to sell or offer to sell any consumer food items or goods, goods or services used for emergency cleanup, emergency supplies, medical supplies, home heating oil, building materials, housing, transportation, freight, and storage services, or gasoline or other motor fuels for a price of more than [10 percent] above the price charged by that person for those goods or services immediately prior to the proclamation or declaration of emergency. However, a greater price increase is not unlawful if that person can prove that the increase in price was directly attributable to additional costs imposed on it by the supplier of the goods, or directly attributable to additional costs for labor or materials used to provide the services, provided that in those situations where the increase in price is attributable to additional costs imposed by the seller’s supplier or additional costs of providing the good or service during the state of emergency or local emergency, the price represents no more than [10 percent] above the total of the cost to the seller plus the markup customarily applied by the seller for that good or service in the usual course of business immediately prior to the onset of the state of emergency or local emergency.
  2. Upon the proclamation of a state of emergency declared by the President of the United States or the Governor, or upon the declaration of a local emergency by an official, board, or other governing body vested with authority to make such a declaration in any county, city, or city and county, and for a period of 180 days following that proclamation or declaration, it is unlawful for a contractor to sell or offer to sell any repair or reconstruction services or any services used in emergency cleanup for a price of more than [10 percent] above the price charged by that person for those services immediately prior to the proclamation or declaration of emergency. However, a greater price increase is not unlawful if that person can prove that the increase in price was directly attributable to additional costs imposed on it by the supplier of the goods, or directly attributable to additional costs for labor or materials used to provide the services, provided that in those situations where the increase in price is attributable to the additional costs imposed by the contractor’s supplier or additional costs of providing the service during the state of emergency or local emergency, the price represents no more than [10 percent] above the total of the cost to the contractor plus the markup customarily applied by the contractor for that good or service in the usual course of business immediately prior to the onset of the state of emergency or local emergency.
  3. Upon the proclamation of a state of emergency declared by the President of the United States or the Governor, or upon the declaration of a local emergency by an official, board, or other governing body vested with authority to make such a declaration in any county, city, or city and county, and for a period of 30 days following that proclamation or declaration, it is unlawful for an owner or operator of a hotel or motel to increase the hotel or motel’s regular rates, as advertised immediately prior to the proclamation or declaration of emergency, by more than [10 percent]. However, a greater price increase is not unlawful if the owner or operator can prove that the increase in price is directly attributable to additional costs imposed on it for goods or labor used in its business, to seasonal adjustments in rates that are regularly scheduled, or to previously contracted rates.
  4. The provisions of this section may be extended for additional 30-day periods, as needed, by a local legislative body, local official, the Governor, or the legislature, if deemed necessary to protect the lives, property, or welfare of the citizens.
  5. A business offering an item for sale at a reduced price immediately prior to the proclamation or declaration of the emergency may use the price at which it usually sells the item to calculate the price pursuant to this section.

(C) ENFORCEMENT

  1. A violation of this section is a misdemeanor punishable by imprisonment in a county jail for a period not exceeding one year, or by a fine of not more than ten thousand dollars ($10,000), or by both that fine and imprisonment.
  2. A violation of this section shall constitute an unlawful business practice and an act of unfair competition within the meaning of [cite appropriate code section]. The remedies and penalties provided by this section are cumulative to each other as well as to the remedies or penalties available under all other laws of this state.

SECTION 4. EFFECTIVE DATE

This law shall become effective on July 1, 20XX.

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