High Demand + Low Supply = Price Gouging
On July 13, 2020, Governor Newsom ordered all indoor operations to close. As you may already know, COVID-19 has impacted California harder than most states thus far, meaning these orders may damage the livelihoods of residents and business owners alike. While it’s understandable that millions of people and countless businesses are struggling to make ends meet during these uncertain times, some have turned to price gouging as a means to make more money.
If you’re unsure of what price gouging is, a good example is hand sanitizer. In March, hand sanitizer made its debut as one of the highest-demanded consumer products for safety reasons, of course. However, due to the high demand and short supply, individuals began buying hand sanitizer in bulk and selling it for up to ten times the normal price. If you bought a $30 hand sanitizer, you are likely the victim of price gouging.
The CA Office of Attorney General defines price gouging as “ … sellers trying to take unfair advantage of consumers during an emergency or disaster by greatly increasing prices for essential consumer goods and services.” Essential consumer goods and services include hand sanitizer, masks, gloves, disinfecting wipes, etc.
In California, as well as in many other states, price gouging is illegal.
Price Gouging Rules
Executive Order N-44-20 makes it “ … unlawful to increase the price of food items, consumer goods, or medical and emergency supplies by more than 10 percent of what a seller charged for that item on February 4, 2020.” This order remains in effect until September 4, 2020.
However, exceptions include if the seller experienced increased costs in labor, goods or materials, or if they sold the item at a discount on February 4, 2020, in which case they may sell the item for no more than 10% greater than the price at which they ordinarily sold the item.
If the seller did not offer a discounted item on February 4, 2020, they may not sell the item at a price that is 50% greater than what they paid for it, or, if the seller produced the item, they may not sell it for a price that is 50% greater than the cost to produce and sell the item.
It can be easy to get confused about whether or not you are committing price gouging. To be extra cautious, click here to view the full executive order.
Price Gouging Penalties
Violators of the price gouging laws can face up to 1 year in prison and/or up-to $10,000 fines. They are also subject to civil enforcement actions including penalties of up to $2,500 per violation, injunctive relief, and mandatory restitution.
As such, it’s in your best interests to refrain from price gouging of any kind, even if it seems harmless. Not only are you putting your freedom on the line, but victims may suffer further damage than they already have in this pandemic.
If you are accused of price gouging, however, reach out to us as soon as possible so we can begin devising your defense. The last thing you need is to lose your freedom and financial stability during a time where you need them most. Our attorney at the Law Offices of Evan E. Zelig is here to help you resolve your charges. Call (707) 418-5352 now!