Is Price Gouging Illegal?
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.
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 majority of 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 (usually, this means that the president or a state's governor would need to declare a state of emergency in the region)
Laws against price gouging 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."
You can check this interactive map to see if your state has implemented any price gouging prevention policies. You can also view a comparison table of all the states, if you prefer that format instead. Either way, you'll see individual state citations, the price gouging start date, price gouging end date, state threshold, whether there are active lawsuits or enforcement actions, and if residents have a private right of action.
How Can You Report Price Gouging?
If you think you paid an unfair amount for 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.
Can You Expect Price Gouging to Continue?
In early 2020, we saw several cases of price gouging, but supplies have stabilized in many places since then. So with more availability, the big question is whether or not we can expect price gouging to continue, even if it's not as bad as it was last year. The short answer is yes.
Many states put protections in place last year to help prevent consumers from experiencing price gouging. But some of those are slated to run out soon, if they haven't already. Without those protections in place, there's not much stopping a seller from inflating prices again, even if scarcity is still an issue. Because price gouging laws typically only apply when a state of emergency has been declared, when that runs out there isn't much a government can do. Sure, they can extend the declaration, but they have to have a good reason for doing so.
Many sellers want to capitalize on these opportunities. That means even if they're not inflating prices for items related to the coronavirus pandemic, they'll likely jump on the next chance to increase the costs of their items when a crisis presents itself. Even if the world returns to pre-2020 levels of what we consider "normal," there will still be situations where price gouging can become an issue. Fortunately, you can be proactive, and take necessary steps before these events happen to help protect yourself.
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 a supply shortage 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 shelves.
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 with the coronavirus outbreak, you'll 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. In 2020, the American Red Cross advised that people have these supplies on hand during a crisis:
- 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: How Much Is a Bidet?
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 pandemic? Tell us about them in the comments below.