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Price-gouging in the wake of a natural disaster

Even as state officials in the Carolinas and the Better Business Bureau issue alerts about Hurricane Florence price-gouging, consumers need to understand what defines ‘price-gouging.’

Price-gouging is a legal term, defined by statute. You can’t just claim price-gouging because prices suddenly jumped on a gallon of milk or because a gallon of gas is a dollar more today than it was yesterday.

While investigating claims of price-gouging in Memphis during 2015’s winter storm, I consulted Kevin Walters, communications director of the Tennessee Department of Commerce & Insurance and its Division of Consumer Affairs. Walters told me certain conditions must be met before state officials can investigate a claim of price-gouging:

  1. It must have occurred during an officially-declared state of emergency or disaster.
  2. It only concerns prices on fuel, food, ice, generators, lodging, storage space and other necessities.
  3. It only applies if if prices are “…grossly in excess of the price charged prior to the emergency.”

The problem is determining what’s “grossly in excess.” With gas stations, for example, what they charged per gallon before an emergency declaration is not necessarily a matter of public record. It would be difficult to establish the price jump short of a customer’s receipt or a time-stamped, smart phone snap-shot of the pumps.

When I consulted Mississippi Attorney General Jim Hood on the issue back in 2015, he said, “Businesses can raise their prices in order to recover actual expenditures. In the case of gas station owners, they cannot charge more for their fuel already in the ground before the emergency — only on new truck loads if it costs them more to bring the product in.”

The Better Business Bureau added that price-gouging can also be applied to hotels during times of crisis and to disaster recovery services, including home repair, roofing, flooring, furniture, tools and restoration services. Again, it all depends on your state’s price-gouging laws.

If you suspect price-gouging during an officially declared emergency, contact either your state’s attorney general’s office or its division of consumer affairs immediately. Their complaint forms or consumer hotlines are typically just a Google search away.

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