A.G. Schneiderman Announces Settlement With Tree Removal Company Following Excessive Price Gouging In Wake Of Tornado

Lonnie Joe Drake Of Upstate NY Tree Service Ordered To Pay Over $9,600 In Refunds To Consumers And Civil Penalties Of $7,000

Schneiderman: Price Gouging In The Wake Of A Storm Kicks Vulnerable New Yorkers While They Are Down

ELMIRA - Attorney General Eric Schneiderman announced a settlement following the investigation of Lonnie Joe Drake, d/b/a Upstate New York Tree Service, for price gouging in the wake of a tornado that struck Elmira in July 2012. The Attorney General’s Office investigated consumer complaints and found that Drake charged grossly excessive prices for tree removal, an essential service in the wake of a tornado.

“Price gouging in the wake of a storm kicks vulnerable New Yorkers while they are down,” Attorney General Eric T. Schneiderman said. “My office will continue fighting to hold these companies accountable and make sure nothing gets in the way of helping hardworking New York families get back on their feet after disaster strikes.”

New York State’s Price Gouging Law strictly prohibits the unjustified price inflation of essential goods and services during an "abnormal market disruption" like those caused by a tropical storm, flood, hurricane or other disaster. Essential services include tree removal services, as well as other services necessary to repair damaged property.

After the tornado, Drake increased his rates to as much as $2,650 per “pick” or “leader” of a tree, which is a rate he had never before charged. Though he had introduced a pick rate of $2,450 just prior to the tornado, he had always included his hauling and dumping fees with this higher rate. After the tornado, he charged consumers covered by insurance the higher rate, plus $810 per load to haul away debris, even though the City of Elmira was picking up debris and waiving dump fees. Drake also inflated prices and then offered consumers various “discounts,” leading them to believe they were receiving a bargain price. 

In settling the case, Drake agreed to pay over $9,600 in refunds to ten consumers who should have received a senior citizen discount or had been charged a separate hauling fee.  Drake will also pay civil penalties and costs totaling $7,000. 

According to the Consent Order signed by Chemung County Supreme Court Justice Judith F. O’Shea on February 5, 2014, Upstate New York Tree Service is prohibited from engaging in any fraudulent, deceptive or illegal business practice in violation of New York State’s General Business Law, Home Improvement Contracting Law and Personal Property Law. The company may not charge grossly excessive prices during any abnormal disruption of the market and must provide each consumer, before starting work, a separate document setting forth the fees charged, including his price per “pick” or “leader”, as well as costs for hauling and dumping. Drake must also prepare one service contract or invoice identifying all work performed, provide a consumer or his insurer with a complete invoice to be signed prior to commencing work, direct payments to be made to his assumed business name and not to himself, personally and apply a standardized amount or percentage rate discount to each customer eligible for advertised discounts, specifically the advertised 10 percent discount to seniors.

The Attorney General’s Office had previously handled a price gouging case against Drake in 1999, after a severe Labor Day storm in Central New York. The Attorney General’s investigation after the Elmira tornado revealed that Drake had failed to comply with the terms of the 1999 order. 

Attorney General Schneiderman urges consumers or business owners who believe they may have been defrauded to contact his Binghamton Regional Office at 607-721-8771.

This matter was handled by Assistant Attorneys General Judith Malkin and Michael J. Danaher, Jr. under the supervision of Martin J. Mack, Executive Deputy Attorney General for Regional Affairs. Investigator Kathleen Coppersmith assisted in the case.