A.G. Schneiderman Brings First Series Of Enforcement Actions In Post-Hurricane Price Gouging Investigation As Consumer Complaints Rise

A.G. Schneiderman Brings First Series Of Enforcement Actions In Post-Hurricane Price Gouging Investigation As Consumer Complaints Rise

 

NEW YORK – Attorney General Eric T. Schneiderman today announcedthat his office has notified 13 gas station operators of his intent to commence enforcement proceedings against them for violations of the New York State Price Gouging statute. These are the first of what is expected to be a series of actions taken in a wide-ranging investigation launched in the wake of Hurricane Sandy for price gouging after receiving hundreds of complaints from consumers across the state of New York. 

"Our office has zero tolerance for price gouging and we are taking action to send a message that ripping off New Yorkers is against the law," said Attorney General Schneiderman. "Today's action is the first in a series of steps my office will take as we continue to actively investigate the hundreds of complaints we've received from consumers of businesses preying on victims of Hurricane Sandy. We 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. 

The thirteen station receiving notices are as follows:

Nassau County

  • Shell

            408 Rockaway Turnpike

            Cedarhurst, NY 11516

            Consumer complaint 5.00+

Suffolk County

  • Babylon Gas Station/Express Mart

            1000 Route 109

            Lindenhurst, NY 11757

            Consumer complaint $4.99

  • USA Petroleum

            East Islip, NY

            11730, NY

            Consumer complaint $5.50+

  • USA Petroleum

            2664 Route 112

            Medford, NY 11763

            Consumer complaint 5.50+

Westchester County

 

  • Shell

            3709 Crompond Road

            Cortlandt Manor, NY 10567

            Consumer complaint $5.00

  • Mobil

            174 Westchester Avenue

            White Plains, NY

            Consumer complaint $5.05

  • Mobil

            Hutchinson River Parkway

            White Plains, NY

            Consumer complaint $5.03

Brooklyn

  • Sonomax

            278 Greenpoint Ave

            Brooklyn, NY

            Consumer complaint $4.74

Queens

  • Mobil

            4040 Crescent St

            Long Island City ,NY

            Consumer complaint $4.89

  • Shell

            71-08 Northern Blvd

            Jackson Heights, NY

            Consumer complaint $5.50

  • Delta

            1309 14th Avenue

            College Point, NY

            Consumer complaint $5.00

Bronx

  • Getty

            600 Pelham Parkway

            Bronx, NY

            Consumer complaint $5.39

  • Mobil

            688 E. Gun Hill Road

            Bronx, NY

            Consumer complaint $4.89

 

Today's actions are based upon a review of both consumer complaints and independent pricing information.

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.

Attorney General Schneidermanadded, "These thirteen retailers stand out from others in the high prices they have charged and in the size of their price increases."

The Attorney General stated that this is just an initial round of notices and that there will be others as we continue our investigation into the complaints we have received.

Attorney General Schneiderman noted as an example that, in the case of the Mobil station located at 40-40 Crescent Street in Long Island City, the price per gallon was posted at the roadside as $3.89. The line for the station was three city blocks long. When the consumer got to the pump, the price sign noted a cash price of $4.89 for regular gas and a credit card price of $4.99. The consumer paid the $4.99 using his credit card because he was low on cash and needed the gas.

In another example, at the Express mart station located at 1000 Rte 9 in Lindenhurst, a consumer has reported that there were no road signs indicating the gas prices, only a plywood sign next to the road stating they were only accepting cash for gasoline purchases. There was a long line at the gas station. When the consumer pulled up to the pump he was told the gas price was $4.99 a gallon. He paid the $4.99 because he needed the gas.

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