Senate News Update
From Senator Jane Earll
October 3, 2005

Price Gouging Rears Its Ugly Head Again

Disasters and emergencies usually bring out the best in citizens and businesses.

We've seen it in the aftermath of a hurricane or terrorist attack. Shock gives way to resolve and people lend a hand. Unfortunately there are exceptions, where such situations bring out the worst. This we also have seen or read about.

The state Senate recently passed legislation I am co-sponsoring that will allow us to identify those who are exploiting a crisis, and give the state Attorney General the tools to go after them. Senate Bill 450 would prohibit price gouging during and immediately after a state of disaster emergency.

Specifically, Senate Bill 450 would prohibit "unconscionably excessive" pricing during a declared state of disaster emergency and 30 days after. Drafted in cooperation with state Attorney General Tom Corbett, the measure gives the Attorney General the authority to investigate possible price gouging, and imposes penalties on violators.  A state of disaster emergency could be the result of a natural disaster, labor strike, act of terrorism, or other event.

Under the measure, consumers who suspect price gouging could file a complaint with the Attorney General's Bureau of Consumer Protection. If an investigation verifies price gouging, the business would face civil penalties of up to $10,000.

Pricing would be considered "unconscionably excessive" if parties within the chain of distribution (manufacturers, suppliers, wholesalers, distributors or retailers) increase prices by 20% or more over the average price for the same goods or services available in the affected area in a week prior to the state of emergency.

The law would not apply to price increases caused by additional expenses, such as replacement costs, taxes and transportation. I certainly understand the need for businesses to recoup their costs and make a reasonable profit; this bill is not aimed at them. It targets business operators who seek to exploit a disaster and take advantage of consumers when times are difficult.

I originally co-sponsored this legislation in response to price gouging reported in the wake of the Sept. 11, 2001 terrorist attacks, and again in 2003. However, each legislative session ended before the General Assembly could act on the measure. The tragic events in the Gulf States have given the problem of price gouging more attention, and this bill has strong bipartisan support.

No legislation can change human nature, of course. There will always be those who seek to profit from disasters and emergencies. But, if the House of Representatives follows the Senate and approves Senate Bill 450, and the governor signs it into law, we'll be able to identify those who are exploiting a crisis, and give the state Attorney General the tools to go after them.

By providing a process that targets the few profiteers, we can focus more attention and support on the vast majority who are trying to lend a helping hand in a time of crisis.

As always, if you have any questions on this or any other state government matter, please do not hesitate to contact my office directly at (814) 453-2515.