What is Price Gouging?

Price gouging is raising the price of a product excessively higher than the merchant’s cost to take advantage of a shortage caused by an emergency, like the pandemic we’re now in.

Is Price Gouging Really a Crime?

Yes, under NY State and NY City laws. The state law prohibits selling consumer goods during an abnormal disruption of the market at an unconscionably excessive price.

Who decides if the price is “unconscionably excessive” or just kind of high?

The judge does. The question is whether there was a gross disparity between the price of the goods or services before and after the emergency. If the merchant had to pay a much higher price to get the goods, he can use that as a defense.

What Can I Do if I Have Been a Victim on Price Gouging? Do I Have to Buy the Product to Complain?

You can report it to the NY State Attorney General by filling out their form. You do not have to buy the product to complaint; offering the product at the excessive price is the same violation as selling it. The Attorney General has the power to sue on a consumer complaint and to get an order from a judge to stop the practice, impose up to a $25,000 fine, and make the merchant pay restitution to the customers.

Is There a NY City Law Against Price Gouging?

Yes – and it’s tougher than the state law. The City’s emergency rule enacted on March 16, 2020. Any increase in price over 10% is a violation, and the City has been issuing numerous summonses to violators. Click this link for a list of the products covered by this Emergency Rule.

How Can I File a Price Gouging Complaint With the City of New York?

Click this link to go to the NYC Complaint Form. To make a City law complaint, you have to buy the product and they will ask you for a receipt.

Ladies – Toilet Paper is not covered under the City law, but you can complain to the State.

Is There a Federal Law Against Price Gouging?

No, but on March 23rd President Trump issued an Executive Order instructing the Department of Health and Human Resources and the Department of Justice (USDOJ) to enforce the anti-hoarding provisions of the Defense Production Act against those who hoard supplies of necessary health and medical resources. The Act defines “Hoarding” of materials which have been designated as scarce, as accumulating quantities in excess of what the company will reasonably need for its business purposes, or for the purposes of resale at prices in excess of prevailing market prices. This wording is really pretty loose, and someone who is acquiring N95 masks or ventilators for the purpose of price gouging will have no trouble defending against such an accusation.

Can the NY State and City Governments Avoid Price Gouging?

If they buy the materials outside their own jurisdictions, the laws never apply, and most price gouging laws are only designed to protect consumers, not governments. Therefore, both our City and State governments, as well as all other city and state governments, have to compete with every other government to buy the same goods and medical equipment. With no leadership or controls from the federal government, everyone is competing for the same goods and the prices are skyrocketing. Even federal government agencies have also been subject to price gouging, but no federal action is being taken.

3M, which makes N95 respirator masks, got an injunction in federal court against price gouging, but the complaint was really about another company fraudulently using 3M’s trademark and telling the City of New York that it was an authorized 3M dealer. It was also charging grossly inflated prices for the masks. Although the complaint alleged a violation of the NY state price gouging law, the case was really about trademark infringement. Notably, 3M has promised to donate any money it gets from the lawsuit to charities related to COVID 19.