Is Price Gouging Illegal?

There's no federal law against price gouging, and in some states the practice is perfectly legal. But you can report it.
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No one wants to pay way more than what an item is worth, but sometimes consumers can't shop around. When you're asked to overpay for a soda at a movie theater, no big deal — you either pay up or go without for a few hours. But what if there's a crisis and sellers start charging triple the price for goods like medicine or food? Or over $100 for a bottle of hand sanitizer? Then we start talking about price gouging.

Read on to learn about price gouging laws and the actions you can take if you think you've paid too much for an essential item.

What Is Price Gouging?

Price gouging happens when sellers significantly increase the prices of consumer goods and services during a crisis, according to the National Law Review.

Price gouging laws typically limit how much an item's price can rise after a state of emergency is declared.

Is Price Gouging Illegal?

In the United States, there's no federal law against price gouging, and in some states price gouging is perfectly legal. Although many call the practice unethical, some argue that price gouging prevents shortages. Would you rather be staring at an empty toilet paper shelf, or one where stores are charging $5 extra per package?

In the other 34 states (plus Washington, D.C.), laws vary, but in general price gouging laws only come into effect:

  • On essential goods like medicine, food, fuel, housing, and other goods needed for survival
  • During a government-declared emergency (typically, this means that the president or a state's governor would need to declare a state of emergency in the region)

By March 14, governors had declared states of emergency in 39 states, and President Donald Trump had declared a national emergency due to COVID-19.

SEE ALSO: Top Coronavirus Prevention Tips for Shoppers

Laws typically limit how much an item's price can rise after a state of emergency is declared — some set a price ceiling at 10%, others at 25%, and some are more vague. For example, New York simply condemns increases to an "unconscionably excessive price."

FindLaw offers a state-by-state summary of price gouging laws here.

How Can You Report Price Gouging?

If you think you paid an unfair amount on a needed good after a state of emergency was declared, you can contact your state's attorney general's office to file a complaint, either by phone or online. While processes vary, the attorney general's office in Virginia advises those filing a complaint to submit copies of any invoices, contracts, or receipts relating to the issue, and to keep the originals. That seems like solid advice in any state.

How Can You Protect Yourself Against Price Gouging?

Whether your state offers protections from price gouging or not, being proactive in the face of a coming crisis is your best bet.

While anti-price-gouging laws can help keep prices low, they can also make shortages more severe. Businesses may not stockpile goods as heavily, and shoppers may not hesitate to buy more than they truly need without a sharp sticker shock to hold them back. Even if you're guaranteed a reasonable price on your item, that doesn't guarantee it'll be on the shelves.

While anti-price-gouging laws can help keep prices low, they can also make shortages more severe.

If you can see a crisis coming — whether it's a natural disaster or a pandemic — shop early! This way, you can be sure to get the things you need at prices that don't break the bank.

As for the coronavirus outbreak, you want to be ready in case you become ill and need to stay home for a couple of weeks. You also want to be prepared in case the crisis disrupts the supply chain of critical goods like medication. The American Red Cross advises that people have these supplies:

  • Medication
  • Food staples
  • Household supplies

Regarding the first item on that list, make sure you have at least a 30-day supply of any prescription medication you take. You can also be ready with over-the-counter pain relievers, cough and cold medicines, stomach remedies, fluids with electrolytes, and vitamins. As for household supplies, they range from toilet paper, diapers, and laundry detergent to hand sanitizer and soap.

SEE ALSO: Does Hand Sanitizer Work on the Coronavirus?

One item that's been seeing lots of shortages? Masks. But the World Health Organization cautions that wearing a mask when you're healthy likely won't do much to protect you from becoming ill, especially if it's worn improperly.

Other crises require other preparations — for example, keeping a small stockpile of drinkable water can be helpful during a natural disaster. But no matter the emergency, being ready for it ahead of time can save you a bundle of money and prevent a ton of stress.

Readers, have you seen examples of price gouging in the midst of the coronavirus outbreak? Tell us about them in the comments below.


DealNews Contributing Writer

Formerly a content writer for DealNews, Erin Coduti now brings that experience to the blog team as a freelancer. Previously, she wrote for a television news station and a literary fan magazine.
DealNews may be compensated by companies mentioned in this article. Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).
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4 comments
Twig
Unless you have lived through the frustrating 1970's gas lines created by OPEC and the government price and quantity controls, it is easy to get all emo and name calling. I get it. R2sd3's perspective is far more helpful and reasoned. Sitting in gas lines for hours to buy a limited number of gallons of gas left me willing to pay at least two to three times more while thinking how to adjust other spending in order to cover it. About day 3 when you are living in a Florida home with no power after a hurricane, you get to thinking that maybe buying that generator from a guy who went to Texas, Nevada, Pennsylvania or Oregon and loaded up his trailer with name brand generators. What's a fair price to accept that covers his time and expenses (gas, food, wear and tear) that will provide friends and family temporary relief from the heat and humidity? How much would you want? Be honest! Sometimes those folks who appear to have cold black hearts are your angel when local supply is exhausted.
Texian
If there is a willing buyer and a willing seller how is it possible to 'gouge' someone?
R2sd3
Educate yourselves. Don't simply react to the scary label of "gouging". The people who buy, hold, and sell goods are the ones taking a risk and doing a public service. "Price gouging" should be encouraged right now. It is really just charging the market price for an item. We should really object to items being sold below market prices since this is what results in shortages for everyone, e.g., people buy more than they need to "be proactive" as this article actually suggests. Wouldn't you rather find milk on the shelf at $7.25 a gallon or no milk at all? Stop denying reality and embrace the real world of market prices and private property rights- we'll all be better off. Don't allow gov't to restrict how much I can sell my private property for (this is both a denial of private property AND free speech rights). https://www.youtube.com/watch?v=_2STbdWkgyg Any authority which makes this practice illegal only encourages shortages and misery for everyone by ignoring reality.
COMPUTIAC
You should do better research before posting.
I bet you will find this is true in most if not all states.

Price gouging is illegal in Connecticut during public health emergencies.

Source :
https://patch.com/...p2A_HPJTxto4dxtNuMoHO2OCgAnAs