As the COVID-19 pandemic continues and the triggering states of emergencies are largely extended, companies are increasingly focused on compliance with state price gouging statutes. State attorneys generals have launched investigations and brought lawsuits, and several class actions have been filed by consumers against companies for alleged price gouging, up and down the supply chain. The relief sought in these actions highlights the risk that violators of price gouging statutes could find themselves facing hefty damages claims—perhaps to a greater extent than immediately obvious.
Though much attention has been paid to state price gouging laws, several states without price gouging laws have nevertheless been active enforcers. Governors in many of these states have issued executive orders empowering their enforcers to target price gouging. Other states have repurposed existing laws to target price gouging. Price gouging in these states may pose greater compliance risk than in states with specific price gouging laws because these the states may not have statutory definitions or clear standards for what conduct constitutes unlawful price gouging. In this post, we consider price gouging rules and enforcement in states without price gouging-specific laws.
When it comes to price gouging in the Lone Star State, Attorney General Ken Paxton is sending a message: don’t mess with Texas. On March 26, 2020, AG Paxton accused Auctions Unlimited, a Texas auctioneer, of price gouging disinfectant wipes, hand soaps, and 750,000 N95 respirator masks. Bidding for just 16 N95 respirator masks went as high as $180 – despite the owner receiving warnings from both AG Paxton and local police – before Texas authorities intervened and stopped the auction. The lawsuit seeks civil penalties of no more than $10,000 per violation, and $250,000 in the event the deception impacted anyone over 65 years of age.
In early March, California Attorney General Xavier Becerra issued a consumer alert on price gouging. Two weeks later, police in San Diego arrested eight people for price gouging. The same week, investigations by Sacramento authorities prompted new warnings from local authorities. Since then, both the Governor and Attorney General have indicated price gouging will remain top of mind. Typically, price gouging laws extend for short periods — weeks or a month — but we now know that California price gouging rules will remain in effect through September.