Creates a private right of action for unlawful price gouging for injunctive relief and recovery of actual damages or $1000 whichever is greater

Title of bill

An act to amend the general business law, in relation to price gouging

Purpose or general idea of bill

The purpose of this bill is to grant citizens who are victims of illegal price gouging in times of emergency the right to directly sue the responsible party.

Summary of specific provisions

The bill inserts a new subdivision into the existing price gouging statute (General Business Law Section 396-r) granting a private right of action to citizens who fall victim to price gouging in times of emergency. The bill would provide for the possibility of injunctive relief, a minimum $1,000 damage claim and a maximum $5,000 penalty for willful violations.

Justification

Presently, only the State Attorney General is empowered to bring legal action against violators of the price gouging statute. This bill would leave the Attorney General's powers in this regard intact, but would also permit individual victims of price gouging to sue the price gougers directly.

The events that occurred during the Great Ice Storm of 1998, which affected five northern counties in New York, demonstrate the need for this legislation. These counties were in a state of emergency, which placed the price gouging statute in effect in those areas. Nonetheless, reports from these northern counties indicated that, prices on everything from electrical generators to hotel space to milk and batteries increased dramatically in an attempt to take advantage of those suffering from the disaster. Indeed, hundreds of complaints of price gouging were filed. By some accounts, prices were set at six times above normal. For example, a $40 piece of cable was being sold for $240, C batteries were being offered at $11 a piece and one store was charging $995 for generators that are regularly priced at $690.

This example, along with documented instances of price gouging that have occurred since 1998, including gouging by certain hotels after the events of September 11, 2001, gouging by snowplow operators after a major snowstorm in Buffalo in December 2001, and gouging that occurred after Hurricane Katrina in 2005, demonstrate that the threat of enforcement by the Attorney General is not serving as an adequate deterrent. Other states have recognized that a private right of action is necessary to effectively deter would be price gougers. At least seven other states allow private plaintiffs to bring actions against those who engage in such activity.

Clearly, the current enforcement provisions of the price gouging statute are insufficient. Private citizens must be empowered to seek relief on their own from those who seek to profit unjustly from others' misfortunes.

Prior legislative history

2007-2008: A.223 - Passed Assembly 2005-2006: A.662 - Passed Assembly 2003-2004: A.5155 - Passed Assembly

Fiscal implications

None.

Effective date

Immediately.