Consumer Protection

Price Gouging

Act 376 of 1997 prohibits businesses from price gouging during a state of emergency. The law prohibits businesses from charging more than 10 percent above the pre-disaster price of goods or services. The scope of the law is broad and is intended to cover anything that may be needed in the event of a state of emergency. Examples of items and services covered by the law include: food, fuel, water, flashlights, batteries, blankets, medicine, bandages and construction materials.

The price gouging law is triggered whenever a state of emergency is declared by federal, State or local governments. The ban on price gouging remains in effect for at least 30 days and can be extended another 30 days by the local governing body if necessary to protect the lives, property or welfare of the citizens. For home repairs, the law remains in effect for 180 days.

While the law sets a general 10 percent cap on price increases during an emergency, businesses may lawfully charge a higher price if they can establish that the higher price is directly attributable to additional costs incurred by the retailer, by its supplier or as the result of additional costs for labor or materials used to provide the goods or service. In such a limited situation, the business may charge no more than 10 percent above the total of the cost to the business, plus the markup which would customarily be applied by the business for that good or service in the normal course of business.

A violation of Act 376 is a violation of the Deceptive Trade Practices Act. The Attorney General can seek injunctive relief, restitution to consumers, costs, attorneys’ fees and civil penalties up to $10,000 per violation. Criminal sanctions may also apply to violators. To avoid price gouging, shop around before purchasing goods or services, especially for post-disaster home repairs. Avoid “drive-by” quotes from door-to-door solicitors. When possible, deal with established, reputable businesses in the community. Always get estimates and price quotes in writing.

If you believe that a business may be engaging in price gouging, contact the Attorney General’s office.