On March 4, 2019, Governor Newsom declared a state of emergency in the State of California due to the COVID-19 pandemic. During the past month, panic buying engulfed California as people went out buying unnecessary amounts of canned goods, cleaning supplies, hand sanitizer, and toilet paper. While there are many out there helping those in need, others choose to take this opportunity to profit by engaging in price gouging.
There are lots of different definitions of price gouging floating around on the internet and circulating in news publications. Some people perceive price gouging as merely “high prices for certain goods.”
Price gouging is outlawed and carefully defined in California Penal Code Section 396.
What is Price Gouging?
Price gouging is a price increase of 10% or greater for a particular good or service following a declaration of a state of emergency. For example, if prior to March 4, 2020, a market charged $10.00 for a pack of toilet paper and following the declaration, increased its price to $11.50, the marginal price increase would still constitute price gouging.
What types of Goods and Services are Protected from Price Gouging?
While the list is exhaustive, here is a list as it relates to COVID-19:
Consumer food items or goods (anything used or intended for use for food, drink, confection, or condiment by person or animal) (e.g., canned goods, non-perishables, toilet paper, disinfectants, diapers, baby wipes, dog food)
Emergency supplies (e.g., propane, flashlights, batteries, candles, soaps, diapers, water)
Medical supplies (e.g., hand sanitizer, flu medicine, latex gloves)
Transportation services (e.g., delivery services/ charges)
Who Can be Guilty of Price Gouging?
Price gouging is not limited to only businesses. A single person can be guilty of price gouging.
What are the Exceptions?
There are exceptions. Typically, a price increase is only justified if the seller can prove the increase in price is attributable to the increase of cost needed to provide the good or service. For those businesses impacted by supplier cost increases, customer disclosure is advised.
How Long are Price Gouging Laws in Effect?
Price gouging is illegal for a period of 30 days following the declaration of emergency. State or local governments may extend this period for additional 30 day periods if needed.
Currently, the State of California has made price gouging illegal in the State of California until September 4, 2020.
What are the Penalties?
Price gouging is a misdemeanor punishable by imprisonment for a period not to exceed one year or fine of not more than $10,000 dollars or a combination of both.
How Should I Report Price Gouging?
Locally, you may report it to the Affirmative Civil Enforcement Unit of the City Attorney’s Office at (619) 533-5800. You may also file a complaint online by clicking here.
The State of California asks citizens to report price gouging by going to the Attorney General’s website or by calling (800) 952-5225.