New York Governor Andrew Cuomo recently addressed the issue of price-gouging in the face of the rapidly spreading coronavirus, COVID-19: “If you are a store, you can lose your license and we are very serious about this. For the few dollars that you are going to make during this situation it is not worth your while. It is not just price gouging. It is price gouging in an emergency situation where you are being exploitative of the public.” Governor Cuomo drew attention to “specific legal provisions for price gouging in an emergency situation.” He ended his statement by counseling New Yorkers to be on the look out and report suspected price gouging.
In New York, General Business Law § 396-r prohibits merchants from charging an “unconscionably excessive price” for goods and/or services that are vital to the “health, safety or welfare of consumers during an abnormal disruption of the market place or state of emergency.” Courts have held abnormal disruption in the market place may be triggered by “weather events, power failures, strikes, civil disorder, war, military action, national or local emergency, or other causes.” The price gouging law covers New York vendors, retailers and suppliers, including but not limited to hotels, supermarkets, pharmacies, gas stations, hardware stores, bodegas, delis, taxi and livery cab drivers, home repair contractors and tree and snow removal services.
“Unconscionably excessive price” is not explicitly defined in the statute but is described as the representing a “gross disparity” from the price such goods or services were sold or offered for sale immediately prior to the onset of the abnormal disruption of the market. However, in defense, merchants may provide evidence the higher prices were justified by increased costs beyond their control.
Business owners would do well to protect themselves against accusations and/or charges of price-gouging. This can be done by keeping detailed records of: purchase prices, history of sales prices, area prices, and availability of products. Additionally, merchants may wish to implement limits in the number or amount of staple products sold to customers, such as hand sanitizer, over-the-counter medication, disinfectant, etc. Most importantly, business owners must remain vigilant. In the current climate, accusations of price-gouging could be highly detrimental to businesses both in legal terms and public relations.