According to a press release by the New Jersey Office Of The Attorney General (NJOEM), Attorney General Jeffrey S. Chiesa and Governor Chris Christie warned merchants about New Jersey price gouging laws during the State of Emergency declared in reaction to the devastation caused by Hurricane Sandy.
Which Merchants Are Typically Guilty Of Price Gouging?
When a natural disaster – such as a hurricane or earthquake – strikes, a number of retailers will try to take advantage of the victims. However, there are some which seem to be more likely than others. Among the most common offenders are gas retailers, grocers, and taxis.
If you have to visit one of these types of retailers either during or 30 days after the termination of a State of Emergency, be on the lookout for price gouging.
What Exactly Is Considered Price Gouging?
Price gouging is when a retailer unnecessarily, and callously increases their prices during an time of great fear and panic and/or in an emergency situation. This is why you need to engage in hurricane preparedness in advance!
In order to prevent the evaluation of price increases from being subjective, the state has set up precise guidelines in this matter:
The law deems price increases excessive if they are more than 10 percent higher than the price at which a good or service was sold in the usual course of business prior to the State of Emergency; or, if additional costs are imposed by suppliers or certain logistical concerns during the State of Emergency, the increase is more than 10 percent of the amount of markup from cost, compared with the markup ordinarily applied.
What this means is that a retailer is allowed to raise their prices by up to 10 percent during a time of emergency, without it being considered price gouging. However, once those price increases are more than 10 percent higher than the prices before the State of Emergency, that retailer is breaking the law!
If the retailer had to increase their prices more than 10% due to the prices of their supplies increasing, or due to other “logistical concerns” because of the State of Emergency, they will also take into account.
Basically, if it now costs 50% more to ship food to that area, then the grocery stores most likely won’t be punished for raising their prices by more than 10%. We as consumers have to keep in mind the increased costs and labor efforts of the various suppliers and merchants before filing a claim of price gouging.
What Are The Penalties For Price Gouging?
According to the NJOAG website:
Violations are punishable by civil penalties of up to $10,000 for the first offense and $20,000 for the second and subsequent offenses. Each individual sale of merchandise is considered a separate and distinct event.
Based on these numbers and the fact that each individual sale is treated as a separate violation of the price gouging laws, I can’t see why anyone would want to take part in this practice. The profits that one would gain by engaging in price gouging can’t compare to the penalties that they would face if caught.
Governor Christie had this to say:
During emergencies, New Jerseyans should look out for each other – not seek to take advantage of each other. The State Division of Consumer Affairs is looking closely at any and all complaints about alleged price gouging. Anyone found to have violated the law will face significant penalties.
A.G. Chiesa also issued his own warning:
Retailers should know we will conduct a thorough investigation, including an audit of the merchant’s receipts dating back to before the State of Emergency, to examine each and every complaint… Anyone violating the law will find the penalties they face, far outweigh the profits of taking unfair advantage of their fellow New Jerseyans during a time of great need.
How To Report Price Gouging
If you believe that a business has cheated or scammed you by engaging in price gouging, then you can file a complaint with the State Division of Consumer Affairs by visiting its website, or by calling 1-800-242-5846 (toll free within New Jersey) or 973-504-6200.
photo credit: Freedigitalphotos.net
Why We Chose To Make A Loan To A Friend
Leo@Salary Information
November 10, 2012 at 2:37 amIt’s a bit disheartening to compare the American response to a disaster with the Japanese tsunami response. In this country, people take advantage of others during crises through price gouging, looting and other unsavory acts. In Japan, they do the exact opposite and help each other out. I guess we can be thankful that the law at least stepped in to mitigate certain problems.
The College Investor
November 3, 2012 at 9:42 amA very timely topic. It may seemed a smart business move for business owners, but it is so inhumane to take advantage of people who had already been stricken by a calamity. I think in worst cases like this the penalty should be higher and people should be properly informed by the authorities, so that they would know what to do and where to go to file a report.