Price gouging
Price gouging means charging unreasonably high prices for essential goods and services during disruptive events that affect the market. In legal terms, price gouging is defined as charging unconscionably excessive prices for essential goods and services during abnormal market disruptions.
Price gouging is against the law in New York.
New York law prohibits price gouging by anyone in the distribution chain, including retailers, manufacturers, wholesalers, and distributors. The Office of the New York Attorney General (OAG) is in charge of enforcing the price-gouging law. In addition, OAG makes rules and regulations related to price gouging.
Examples of essential goods and services
The OAG applies a commonsense understanding of the phrase "essential goods and services": These are the basic necessities of life. It is impossible to provide a complete list of such goods and services, but here are some examples where OAG or the courts have found a good or service to be essential in certain situations:
- gasoline, diesel, and heating oil
- snow-removal services
- baby formula
- eggs
- bottled water
- electrical generators
- roof repairs
- hand sanitizer
- prescription drugs
- disease-testing kits
- hotel lodging
Examples of abnormal market disruptions
New York’s price-gouging law applies only to prices charged during abnormal market disruptions. The law defines an abnormal market disruption as "any change in the market, whether actual or imminently threatened, resulting from” a list of specific triggering events. These events include any kind of natural disaster or life-threatening weather event, as well as “failure or shortage of electric power or other source of energy, strike, civil disorder, war, military action, national or local emergency, drug shortage, or other [event] which results in the declaration of a state of emergency by the governor"
The Attorney General will often issue consumer alerts when abnormal market disruptions are happening. You can find these alerts on our website.
Although you might see a consumer alert from the Attorney General or a declaration of emergency from the governor during an abnormal market disruption, neither of these has to happen to activate the price-gouging law.
What makes prices illegal during abnormal market disruptions
The price-gouging law sets out several ways a price might be illegal during a disruption. Any of the following situations may make a price illegal:
- A price might be simply be an unconscionably extreme amount. That is, even if the price does not change before and after a disruption, the price is so high that only in the circumstances of a disruption would someone ever think of paying that price.
- The price might have been set using unfair leverage or unconscionable means. The Attorney General has set out, in legally binding rules, some examples of these unfair leverage or unconscionable means:
deceptive pricing, such as adding hidden fees or advertising the price as one amount but charging more
- adding burdensome payment terms, like illegally high interest rates
- forcing a consumer to pay more than a business is actually owed if the customer does not pay on time or follow some other condition of the purchase contract
- signing a contract to sell an item at one price before the disruption, and then demanding the customer pay more even though the seller has no contractual right to make that demand – this often happens when the buyer is a small business
- using high-pressure sales tactics, like force or intimidation, abusive language, or threats of violence
- demanding that the buyer agree not to complain to the Attorney General or law enforcement
- A seller may have gouged prices if it raises the price it charges for an essential good or service by more than 10 percent of the price it charged for the item right before the disruption. If the seller is a big business that controls more than 30 percent of the market, it may have price gouged if it raises the price by any amount. The seller may not have price gouged if it can show that it needed to raise prices to cover increased costs or keep the same profit margins that it had before the market disruption.
- If a seller charges an amount that grossly exceeds the price that most other nearby sellers charge for the same item in the trade area, it may have gouged prices. The seller may not have price gouged if it can show that it had to charge the higher amount to cover increased costs or keep the same profit margins as a comparable seller nearby in the trade area.
New York City has an additional price-gouging law that also applies to both of the following:
- items that have been declared in short supply (Rules of the City of New York, section 5-38)
- essential goods and services during a state of emergency that the mayor has declared (Rules of the City of New York, section 5-42)
For more information on the New York City law, visit the New York City Department of Consumer and Worker Protection.
Penalties for price gouging
Anyone engaging in price gouging may be required to pay back affected consumers as well as pay a mandatory penalty. This penalty can be up to the greater of the following:
- three times what they charged for the products that were price gouged
- $25,000
Complaints about price gouging
At OAG, we encourage consumers and merchants to report instances of price gouging.
Merchants
If you believe your distributors are charging unfairly excessive prices for essential consumer goods or services, you can report them without worrying that you will be penalized by OAG, as long as you have not engaged in independent price gouging by raising prices above and beyond the amount needed to recover the higher cost imposed on you to the thresholds decribed earlier on this page.
Consumers
New Yorkers can report concerns about price gouging to OAG.