Relates to price gouging

Summary of provisions

Section 1 provides that during periods of abnormal disruption of the market for consumer goods and services vital and necessary for the health, safety and welfare of consumers, no party within the chain of distribution of such consumer goods shall offer to sell goods for an "unconscionably excessive price." Unconscionably excessive prices is further defined as a price that is excessive as compared to the price at which the good or service was sold or offered for sale by the seller in the usual course of business immediately prior to the state of emergency.

The amendments in Section 1 now make clear that the provisions are to be triggered by abnormal disruptions that result in a declaration of a state of emergency by the governor.

A price will be deemed excessive if the price exceeds, by at least 10%,the price at which the good or service was sold immediately prior to the state of emergency, unless the price charged is because of additional costs imposed by the supplier or other costs of providing the good.. In such situations, the price will be excessive if it represents 10% increase in the amount of markup from cost, compared to the markup customarily applied by the seller in the usual course of business immediately prior to the state of emergency. The amendments make clear how the 10% price point will be applied allowing for a seller's acquisition or replacement cost whichever is higher plus the mark up customarily applied by the seller in the usual course of business immediately prior to the declaration of emergency by the governor. The amendments further allow for fluctuations in regional or national spot or commodities markets.. Other states affected by Hurricane Katrina have adopted similar language. Finally, the amendments allow for contract or price formulas agreed to prior to the declaration of a state of emergency,

Section 2 provides the effective date.

Justification

In the wake of Hurricane Sandy, gas stations sought to capitalize on the gas shortage by gouging the price of gas, charging customers a much higher price than before the storm. Additionally, some hotels also allegedly engaged in price gouging, charging upwards of $5,300 for a room after the storm. Such nightly rates are not unusual in Manhattan and other tourist destinations however, for residents of the outer boroughs such prices were up to triple the amount they would have paid for a room prior to the storm. While the Attorney General's office is currently investigating and imposing fines on such gas

stations and other merchants for price gouging after the hurricane, it is difficult for consumers to determine whether price gouging is occurring because there is not an objective definition,

Under current law, whether a price is "unconscionably excessive" is a court determination,. Evidence of price gouging includes a showing that the amount charged represents a "gross disparity" between the-price of the goods or services and their value before the abnormal disruption of the market; or the amount charged "grossly exceeded" the price at which other goods were readily obtainable by other consumers in the trade area.

This bill would add more clarity to the law and would allow for a more objective standard in the investigation of price gouging complaints, rather than placing this determination in the hands of the courts. Additionally, this would also allow consumers to know whether they are victims of price gouging so that they may report such instances to the Attorney general's office.

Fiscal implications

None.

Effective date

Immediately.