According to a press release by the New Jersey Office of Emergency Management (NJOEM), Attorney General Paula T. Dow and the New Jersey Division of Consumer Affairs warned merchants about price gouging laws during the State of Emergency declared in anticipation of Hurricane Irene.
What Merchants Are Typically Found Price Gouging?
When a natural disaster – such as a hurricane – strikes, a number of retailers will try to take advantage of the victims. 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%.
What Are The Penalties For Price Gouging?
According to the NJOEM 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.
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 by Magic Robot
© 2011, Khaleef Crumbley. All rights reserved.
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This is why you need to be prepared for ANY disaster at any time – not just when one is predicted. Having food, water and other necessities stored up is also the wise and frugal thing.
I think it is so sad that retailers would even want to do this. Thank goodness there are these lays in place to prevent it from happening. What kind of greedy world do we live in?! yikes!!
Wow, I never even thought about things like this happening. I have lived through a few natural disasters, and never had this happen. Everyone just got together, helped out and lots of shops even provided stuff for free.
I guess I shouldn’t be surprised. Glad to know there is a law against it tho.
It’s good there are laws in place to prevent this (or at least to enforce penalties after the fact.) Hopefully there wasn’t much (or any) price gouging going on.
Very interesting! I live nearby and I did not know that NJ even had this law.
Price gauging, if any, will happen at smaller stores. It’s our responsibility to inform authority when we come across one. Very informative and timely article Khaleef
Good luck in NJ!
Don’t worry. I stocked up on Hershey chocolate bars. XD
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