BILL NUMBER: S7345
SPONSOR: LANZA
 
TITLE OF BILL:
An act to amend the general business law, in relation to price gouging
 
PURPOSE OR GENERAL IDEA OF BILL:
To further define "unconscionably excessive price" in the context of
price gouging.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 amends Section 396-r of the General Business law. The bill
provides that during periods of abnormal disruption of the market for
consumer goods and services vital and necessary for the health, safety
and welfare. Of consumers, no party within the chain of distribution of
such consumer goods shall offer to sell goods for an "unconscionably
excessive price." Unconscionably excessive prices is further defined as
a price that is excessive as compared to the price at which the good or
service was sold or offered for sale by the seller in the usual course
of business immediately prior to the state of emergency.
A price will be deemed excessive if the price exceeds, by at least 10%,
the price at which the good "or service was sold immediately prior to
the state of emergency, unless the price charged is because of addi-
tional costs imposed by the supplier or other costs of providing the
good. In such situations, the price will be excessive if it represents
10% increase in the amount of markup from cost, compared to the markup
customarily applied by the seller in the usual course of business imme-
diately prior to the State of emergency.
Section 2 provides the effective date.
 
JUSTIFICATION:
In the wake of Hurricane Sandy, gas stations sought to capitalize on the
gas shortage by gouging the price of gas, charging customers a much
higher price than before the storm. Additionally, some hotels also
allegedly engaged in price gouging, charging upwards of $300 for a room
after the storm. Such nightly rates are not unusual in Manhattan and
other tourist destinations; however, for residents of the outer
boroughs, such prices were up to triple the amount they would have paid
for a room prior to the storm.
While the Attorney General's office is currently investigating and
imposing fines on such gas stations and other merchants for price goug-
ing after the hurricane, it is difficult for consumers to determine
whether price gouging is occurring because there is not an objective
definition.
Under current law, whether a price is "unconscionably excessive" is a
court determination. Evidence of price gouging includes a showing that
the amount charged represents a "gross disparity" between the price of
the goods or services and their value before the abnormal disruption of
the market; or the amount charged "grossly exceeded" the price at which
other goods were readily obtainable by other consumers in the trade
area. Additionally, there is no standard for what an abnormal disruption
of the market is. Thus, the bill defines an abnormal disruption of the
market as a disruption as declared by both, the Governor and the Commis-
sioner of the Division of Homeland Security and Emergency Services.
This bill would add more clarity to the law and would allow for a more
objective standard in the investigation of price gouging complaints,
rather, than placing determination in the hands of the courts. Addi-
tionally, this would also allow consumers to know whether they are
victims of price gouging so that they may report such instances to the
Attorney General's office.
 
PRIOR LEGISLATIVE HISTORY:
2024: S.3079 - Referred to Consumer Protection
2023: S.3079 - Referred to Consumer Protection
2022: S.4565 - Referred to Consumer Protection/A.5850 - Referred to
Consumer Affairs and Protection
2021: S.4565 - Referred to Consumer Protection/A.5850 - Referred to
Consumer Affairs and Protection
2020: S.803 - Referred to Consumer Protection / A.237 Referred to
Consumer Affairs and Protection
2019: S.803 - Referred to Consumer Protection / A.237 Referred to
Consumer Affairs and Protection
2018: S.5440 - Referred to Consumer Protection/A.334 Referred to Consum-
er Affairs and Protection
2017: S.5440 - Referred to Consumer Protection/A.334 Referred to Consum-
er Affairs and Protection
2016: S.2825 - Referred to Consumer Protection/A.2133 - Referred to
Consumer Affairs and Protection
2015: S.2825 - Referred to Consumer Protection/A.2133 - Referred to
Consumer Affairs and Protection
2014: S.3656-A - Referred to Consumer Protection
2013: S.3656-A - Referred to Consumer Protection
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect immediately.