Summary: While Americans are focused on day-to-day affordability, gasoline and diesel prices are going through the roof. What can legislators do? The Price Gouging Prohibition Act impowers the state to prevent grossly excessive prices that are not based on increased costs.
Based on New York GBS Sec. 396-r
SECTION 1. SHORT TITLE
This Act shall be called the “Price Gouging Prohibition Act.”
SECTION 2. FINDINGS
The legislature finds that:
(1) During periods of abnormal disruption of the market caused by wars, weather emergencies, strikes, power failures, or other extraordinary adverse circumstances, some parties within the chain of distribution of goods take unfair advantage of the public by charging grossly excessive prices for essential goods and services.
(2) The public interest requires that such price gouging be prohibited and made subject to civil penalties.
(3) Such legislation is not abnormal or unusual. The state of New York first banned price gouging in 1979, the law was first enforced by the state Attorney General in 1985, and the statute was extended in 1998 to cover “any party within the distribution chain of consumer goods.” Most states have limited laws that prohibit price gouging during declared emergencies, but do not address price gouging as a result of a foreign war.
SECTION 3. PRICE GOUGING
After section XXX, the following new section XXX shall be inserted:
(A) DEFINITIONS—In this section:
(1) “Abnormal disruption of the market” shall mean any change in the market, whether actual or imminently threatened, resulting from stress of weather, convulsion of nature, failure or shortage of electric power or other source of energy, strike, civil disorder, war, military action, or national or local emergency.
(2) “Goods and services” shall include (a) consumer goods and services used, bought or rendered primarily for personal, family or household purposes, (b) essential medical supplies and services used for the care, cure, mitigation, treatment or prevention of any illness or disease, and (c) any other essential goods and services used to promote the health or welfare of the public.
(B) RESTRICTIONS
(1) During an abnormal disruption of the market for goods and services, no party within the chain of distribution of such goods or services or both shall sell or offer to sell any such goods or services or both for an amount which represents an unconscionably excessive price in comparison to the actual cost of such goods or services.
(2) This prohibition shall apply to all parties within the chain of distribution, including any manufacturer, supplier, wholesaler, distributor or retail seller of goods or services or both sold by one party to another when the product sold was located in the state prior to the sale. For the purposes of this subdivision, the term “goods and services” shall also include any repairs made by any party within the chain of distribution of goods on an emergency basis as a result of such abnormal disruption of the market.
(C) DETERMNATION OF UNCONSIONABLE
(1) Whether a price is unconscionably excessive is a question of law for the court.
(2) A court’s determination that a violation of this section has occurred shall be based on any of the following factors: (a) that the amount of the excess in price is unconscionably extreme compared to actual costs; or (b) that there was an exercise of unfair leverage or unconscionable means; or (c) a combination of both factors.
(3) In any proceeding commenced pursuant to this section, prima facie proof that a violation of this section has occurred shall include evidence that:
(a) the amount charged represents a gross disparity between the price of the goods or services which were the subject of the transaction and their value measured by the price at which such goods or services were sold or offered for sale by the defendant in the usual course of business immediately prior to the onset of the abnormal disruption of the market; or
(b) the amount charged grossly exceeded the price at which the same or similar goods or services were readily obtainable in the trade area.
(c) A defendant may rebut a prima facie case with evidence that (1) the increase in the amount charged preserves the margin of profit that the defendant received for the same goods or services prior to the abnormal disruption of the market or (2) additional costs not within the control of the defendant were imposed on the defendant for the goods or services.
(D) ENFORCEMENT
(1) Where a violation of this section is alleged to have occurred, the attorney general may apply in the name of the State to the courts within the judicial district in which such violations are alleged to have occurred, on notice of five days, for an order enjoining or restraining commission or continuance of the alleged unlawful acts.
(2) In any such proceeding, the court shall impose a civil penalty in an amount not to exceed twenty-five thousand dollars per violation or three times the gross receipts for the relevant goods or services, whichever is greater and, where appropriate, order restitution to aggrieved parties.
(3) The attorney general may promulgate such rules and regulations as are necessary to effectuate and enforce the provisions of this section.
SECTION 4. EFFECTIVE DATE
This law shall become effective on July 1, 20XX.