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A.G. Schneiderman Warns Against Price Gouging During Power Outages In New York State

Written by Long Island News & PR  |  06. August 2015

Albany, NY - August 5, 2015 - Attorney General Eric T. Schneiderman today issued a consumer alert warning both consumers and businesses about price gouging during major weather events. This alert comes in the wake of major power outages on Long Island caused by a powerful rain storm Tuesday morning. The worst hit areas were on the north shore, in Setauket, Stony Brook, and Port Jefferson, in the Town of Brookhaven. Other hard hit areas include Smithtown and Southold. The storm left as many as 68,000 people without power, and municipalities still scrambling to clear trees and other damage.

New York’s General Business Law prohibits excessive increases in prices of essential goods and services like food, water, gas, generators, batteries, and flashlights, hotel lodging, and transportation, during natural disasters, severe weather events or other events that disrupt the market.

“My office vigilantly monitors potential price gouging before, during, and after this summer storm that has left tens of thousands of consumers without power,” Attorney General Schneiderman said. “I encourage consumers to report any businesses that may be capitalizing on the outage to increase their prices. Emergency weather events are no excuse for dishonest and illegal business practices. ”

Attorney General Schneiderman urged New Yorkers to call his office at 800-771-7755 or visit online to file a complaint if they believe price gouging has occurred.

New York State’s Price Gouging Law (General Business Law § 396-r) prohibits merchants from taking unfair advantage of consumers by selling goods or services for an “unconscionably excessive price” during an “abnormal disruption of the market.” The price gouging law covers New York State vendors, retailers and suppliers, including but not limited to supermarkets, gas stations, hardware stores, bodegas, delis, and taxi and livery cab drivers.

New York’s price gouging law takes effect only upon the occurrence of triggering events that cause an “abnormal disruption of the market.” An “abnormal disruption of the market” is defined as “any change in the market, whether actual or imminently threatened,” that results from triggering events such as “weather events, power failures, strikes, civil disorder, war, military action, national or local emergency, or other causes.” During an abnormal disruption of the market like a major weather event, all parties within the chain of distribution for any essential consumer goods or services are prohibited from charging unconscionably excessive prices. “Consumer goods” are defined by the statute as “those used, bought or rendered primarily for personal, family or household purposes.” For example, gasoline, which is vital to the health, safety and welfare of consumers, is a “consumer good” under the terms of the statute. Therefore, retailers may not charge unconscionably excessive prices for gasoline during an abnormal disruption of the market.

New York’s price gouging law does not specifically define what constitutes an “unconscionably excessive price.” However, the statute provides that a price may be unconscionably excessive” if: the amount charged represents a gross disparity between the price of the goods or services which were the subject of the transaction and their value measured by the price at which such consumer goods or services were sold or offered for sale by the defendant in the usual course of business immediately prior to the onset of the abnormal disruption of the market.

The aftermath of this storm may also necessitate the hiring of contractors to assist with home repairs. Consumers can protect themselves when hiring contractors to perform storm-related services by considering the following:

 

  • Shop around. Get at least three estimates from reputable contractors that include specific information about the materials and services to be provided for the job.
  • Get it in writing. Insist on a written contract that includes the price and description of the work needed.
  • Don't pay unreasonable advance sums. Negotiate a payment schedule tied to the completion of specific stages of the job. Never pay the full price up front.
  • Get references. Check with the Better Business Bureau, banks, suppliers, and neighbors. Always contact references provided to you.
  • Know your rights. You have three days to cancel after signing a contract for home improvements. All cancellations must be in writing.

The Office of the Attorney General has a history of successfully cracking down on illegal price gouging. In the wake of Hurricane Sandy, which saw hundreds of complaints in response to some of the largest jumps in gas prices in state history, Attorney General Schneiderman filed lawsuits with more than 50 gas service stations for violations of the New York State Price Gouging Law. The monetary settlements reached in these settlements totaled more than $300,000 in penalties and costs.

Last summer, Attorney General Schneiderman reached an agreement with Uber, a mobile application that connects riders with for-hire vehicles, to limit prices during “abnormal disruptions of the market” consistent with New York’s price gouging statute. Under the agreement, Uber sets a cap on its pricing during emergencies and natural disasters limited to the normal range of prices it charged in the preceding sixty days – while also limiting the allowable range of prices by excluding from the cap the three highest prices charged on different days during that period.

This past winter, the Office of the Attorney General made available a network of housing counselors and legal services providers to help Buffalo residents resolve issues with insurance companies and mortgage providers following extensive home damage from record snowfall last November. Attorney General Schneiderman also created an “Escalations Unit” within his Buffalo Regional Office to engage directly with an insurance provider or lender on behalf of consumers referred by the Home Owner Protection Program.

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