What Is Price Gouging?

Anyone who knows about economics and the concept supply and demand knows that as demand goes up and supply struggles to keep up, prices can rise too. The more people want something, and the less of it there is, the more expensive that item becomes. This is something that a lot of people are experiencing as shortages of basic goods abound thanks to the panic caused by the COVID-19 Coronavirus.

As people struggle to get basic necessities, some people are taking advantage of the shortage to make a quick buck. For instance, the prices of hand sanitizer and face masks shot up by roughly 500% on eBay. Similar practices can be found pretty much everywhere due to the virus, and while some people may think it is okay, raising prices like this during an emergency is pretty frowned upon by most people.

Is It Legal?

Here in the state of California, the act of price gouging is made illegal under the Penal Code 396. Under this law, it is illegal for someone to unjustifiably raise the prices of basic goods and services by excessive amounts during a state of emergency. As far as the law is concerned, an excessive amount is 10% or more of a price increase during an emergency compared to the prices before the emergency was declared.

The items that are protected from price gouging are mostly basic household items that families regularly need. Some of the items that are specifically listed under the law include:

  • Food and drink
  • Pet food
  • Toiletries
  • Emergency supplies
  • Diapers
  • Batteries
  • Radios
  • Medical supplies
  • Construction materials
  • Oils and gasoline

Services that could be essential to recovering from a disaster are also protected from price gouging. Some of these services include:

  • Transportation
  • Storage
  • Towing
  • Building repairs
  • Hotel rates

Prices of these goods and services can legally be raised slightly to reflect shortages or an increase in the cost of labor during the emergency. In these instances, the seller or service provider will have to prove that the increased prices were necessary.

The Consequences Of Price Gouging

Penal Code 396 makes the act of price gouging a misdemeanor offense. Any seller or service provider who is caught price gouging their customers will face misdemeanor charges. The penalties for this crime are:

  • Up to 1 year in jail.
  • A max fine of $10,000.

How To Deal With Price Gouging?

Price gouging is monitored and enforced by the California Attorney General and local district attorneys. If a person suspects that they are dealing with price gouging, then they should report the incident to their local district attorney’s office or go to the California Attorney General’s website where there is a form that can be filled out online.

During a state of emergency, such as a global pandemic, no one should have to deal with increased prices on necessary goods and services just so one bad person can make a quick buck. This is why price gouging is a crime here in the state of California.

What are your thoughts on price gouging and California’s law against it?

Is it a good idea to protect people during times of emergency? Is the punishment for the crime appropriate? Let us know what you think in the comments down below.

 

What Is Price Gouging?