Schneiderman warns against price inflation of necessary goods and services during Hurricane Sandy
State law prohibits excessive increases in costs of essential goods like food, water, gas, generators, batteries and flashlights
A.G. also issues tips to avoid scams for consumers and businesses recovering from the storm
Attorney General Eric T. Schneiderman has announced an investigation into post-Hurricane Sandy price gouging after receiving hundreds of complaints from consumers across the state of New York.
Before the storm made land fall, the attorney general issued an open letter to vendors in areas forecast to be affected by Hurricane Sandy to warn against price gouging, the inflation of the price of necessary goods and services. General business law prohibits such increases in costs of essential items such as food, water, gas, generators, batteries and flashlights, and services including transportation, during natural disasters or other events that disrupt the market.
Schneiderman also issued a guide to New Yorkers recovering and rebuilding after Hurricane Sandy, including tips on how to avoid scams as they restore and rebuild their homes and businesses.
"Our office has zero tolerance for price gouging," Schneiderman said. "We are actively investigating hundreds of complaints we've received from consumers of businesses preying on victims of Hurricane Sandy, and will do everything we can to stop unscrupulous individuals from taking advantage of New Yorkers trying to rebuild their lives."
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.
Although the office cannot comment on the specifics of ongoing or potential investigations, Schneiderman reported receiving hundreds of complaints from consumers from New York City, the Hudson Valley and Long Island. While the largest number of complaints related to increased gasoline prices, consumers contacted the attorney general to report possible gouging for emergency supplies such as generators, hotels raising rates due to "high demand," as well as increased prices for food and water. The attorney general noted that these complaints might not meet the threshold for coverage under New York's gouging statute, but encouraged consumers to contact his office to report anything that appears suspicious.
"Our office is taking every complaint seriously. Staff from regional offices across the state are triaging and acting on consumer complaints as they come in. We have contacted the targets as part of a preliminary inquiry and vendors are now on notice. While most retailers understand that customers are also neighbors, and would never think of taking advantage of New Yorkers during such disruptive times, emergency circumstances always require an extra sense of vigilance," Schneiderman said.
He urged New Yorkers to call his office at 1-800-771-7755 or log on to his office's website to make a complaint.
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 Hurricane Sandy, 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.
In other words, a "before-and-after" price analysis can be used as evidence of price gouging. Evidence that a price is unconscionably excessive may also include proof that "the amount charged grossly exceeded the price at which the same or similar goods or services were readily obtainable by other consumers in the trade area." However, a merchant may counter with evidence that additional costs not within its control were imposed for the goods or services. Notably, the price-gouging law does not prohibit any disparity between the price charged before and after there is an abnormal disruption of the market. Rather, the statute prohibits a "gross disparity," when it is clear that a business is taking unfair advantage of consumers by charging unconscionably excessive prices, and increasing its profits, under severe circumstances that call for shared sacrifices.
In addition to urging New Yorkers to remain vigilant against potential price gouging as residents continue the rebuilding process, Schneiderman also issued tips on how to avoid scams related to home repair, clean up services and tree removal:
•Never pay cash, and don't pay the full price up front. Establish a payment schedule and adhere to it. Withhold final payment until the entire project is completed to your satisfaction and all required inspections and certificates of occupancy are finalized.
•Check with your insurance company. Before making any decisions, be clear about what will be covered and any steps you will need to take.
•Ask for references, check for licenses. Ask about local work contractors have done. Talk to the people who hired them; look at the jobs if you can. Make sure the contractor has any license required by your local government.
•Estimates are important: Get it in writing. Ask that all estimates for work be in writing and include a description of the material to be used. Be clear that you will not pay for work done that is not agreed upon in writing. Verify that the material used is the same as described in the estimate. Make sure any changes to the estimate are in writing.
•Know your rights. Home improvement contractors are required by law to establish to an escrow account to hold the homeowners' un-disbursed funds when a contract is in excess of $500. Also, a homeowner has a three-day right to cancel a contract unless during an emergency, the homeowner has waived the three-day rule in writing.
•Use a contractor with an address you can verify. If your contractor is "here today and gone tomorrow," you may find it difficult to enforce the guarantee.
•Always be sure the contractor has valid insurance. If a worker is injured, or damage is caused on your property, you could be held liable if your contractor does not have the required insurance.
•Check with your town or city for required permits. Don't let a contractor work without the necessary permits. Failing to get approvals can delay your project, or prevent you from occupying a completed building.
If you believe you are a victim of price gouging or a post-hurricane scam, contact the Attorney General's Consumer Helpline at 800-771-7755 or find a complaint form online at: www.ag.ny.gov.