Many companies have increased prices in recent months. Reportedly, across the economy, prices “rose by 5 percent in May compared with a year ago.” Restaurants are raising prices to cover the cost of increases in wages in a tight labor market. The prices of used and rental cars are quickly rising, due to low inventory and higher demand. Gasoline prices have risen, and not just as a result of the recent cyberattack.
On April 2, 2021, the acting U.S. Attorney for the District of New Jersey released an update of her office’s efforts to prevent fraud related to the COVID-19 pandemic, noting prosecutions involving the Paycheck Protection Program, the Economic Injury Disaster Loan program, and the Unemployment Insurance programs, as well as prosecutions involving price-gouging and hoarding of critical personal protective equipment. The announcement comes on the heels of a similar one by Attorney General Merrick Garland last month, who marked the one year anniversary of the passage of the CARES Act by announcing that, in the past year, the Department of Justice has charged nearly 500 individuals with COVID-related fraud. These announcements serve as important reminders that, even as the vaccine roll out continues and life regains a sense of normalcy, federal prosecutors continue to actively monitor price gouging compliance.
State legislatures are still continuing to enact new changes to their states’ price gouging statutes. Some are expanding the scope of their laws, while others are tailoring the law or emergency orders in response to new issues that have arisen during the course of the COVID-19 pandemic. Idaho took a third tack and limited limit overbroad enforcement so that its law applied only to price increase, and not to price decreases that are deemed to be insufficient.
As part of the federal government’s efforts to combat the COVID-19 pandemic, President Biden plans to “fully use” the Defense Production Act (the “DPA”) to compel production of medical and protective equipment, and ensure adequate supplies and distribution of vaccines. On January 21, 2021, the White House released its National Strategy for the COVID-19 Response and Pandemic Preparedness, in which it stated that “the federal government will use its full powers to prevent hoarding and price gouging, including by reviewing and expanding the designated scarce materials under the DPA.” In doing so, the new administration re-committed the federal government to using the DPA to combat price gouging, a practice started by President Trump in March 2020.
As companies continue to examine their pricing in light of the ongoing COVID-19 pandemic, state attorneys general and private plaintiffs continue to bring suits under state price gouging laws. The complaints include requests for a range of remedies, including injunctions, disgorgement, restitution, fines, or other financial penalties. With the majority of price gouging laws having now been in effect for almost a year, we have seen businesses and state attorneys general enter into a variety of settlements. These settlements are a useful tool for businesses looking to gauge their risk as it relates to price gouging enforcement and compliance.
The gravity of the pandemic is palpable, and seemingly constant news about it is hard to escape, with recent reports including updates on the availability of vaccines, the changing scope of various stay-at-home orders, and the perceived risks of new COVID-19 variants. But there will come a time—perhaps sooner than the pessimists predict—when this will no longer be the all-consuming story it has been for the past ten months. In this post, we address a few of the strongest reasons that most pricing restrictions may be lifted before the start of the next school year.
Businesses regularly engage in promotional pricing and discounts as a sales strategy to attract customers. However, what happens if a business enacted a promotional price right before the pandemic struck and price gouging laws were triggered? Are those businesses stuck with those promotional prices until states of emergency come to an end and price gouging laws are turned off? Some state price gouging laws explicitly provide an exception for promotional or discount pricing. And while other states are silent on the issue, that doesn’t mean businesses are without a defense.
In some ways, it feels like the country is moving into another phase of how we experience the COVID-19 pandemic. With two vaccines in distribution, and more vaccine approvals possible, the pandemic could very well be effectively managed much sooner than experts initially feared. Given the light the end of the tunnel, it is worth renewing talk of how long state and federal price gouging restrictions could remain in place. Emergency declarations and their attendant price restrictions could continue longer than some might hope. In this post, we unpack a few of the strongest indications that these restrictions could endure until the end of the calendar year or beyond.