What is price gouging?
Price gouging refers to sellers trying to take unfair advantage of consumers during an emergency or disaster by greatly increasing prices for essential consumer goods and services.
Is price gouging illegal in California?
Yes, in certain circ*mstances. California’s anti-price gouging statute, Penal Code Section 396, prohibits raising the price of many consumer goods and services by more than 10% after an emergency has been declared. For items or services a seller only started offering after an emergency is declared, the seller may not charge more than 50% greater than what it cost the seller to provide the item or service.
Local laws may also contain their own prohibitions on price gouging.
When does California’s anti-price gouging statute apply?
Price gouging protections apply immediately after the President of the United States, the Governor of California, or a city or county executive officer declares a state of emergency. These protections generally apply for 30 days after a declaration of emergency, although for reconstruction services and emergency cleanup services, protections apply for 180 days after a declaration of emergency. The fact that an emergency is continuing does not, by itself, extend price gouging protections beyond their initial expiration, but state and local officials may extend price gouging protections beyond these timeframes by additional orders.
How can I find out if a declaration of emergency is in effect?
Emergency declarations issued by the Governor are generally available on the Governor’s website at gov.ca.gov. The Office of Emergency Services also maintains a list of such orders issued by the Governor at https://www.caloes.ca.gov/cal-oes-divisions/legal-affairs/price-gouging. For information on locally declared emergencies you should contact the applicable city or county.
Some cities and counties also have their own price gouging ordinances. For information on whether a local ordinance is in effect, please contact the applicable city or county.
Who is subject to the statute?
Individuals, businesses, and other entities must comply with the statute. The statute applies to all sellers, including manufacturers, wholesalers, distributors, and retailers. It also covers all sales, including sales to individuals and families, businesses and other organizations, and government agencies.
What goods and services are covered by the statute?
The statute applies to the following major necessities: lodging (including permanent or temporary rental housing, hotels, motels, and mobilehomes); food and drink (including food and drink for animals); emergency supplies such as water, flashlights, radios, batteries, candles, blankets, soaps, diapers, temporary shelters, tape, toiletries, plywood, nails, and hammers; and medical supplies such as prescription and nonprescription medications, bandages, gauze, isopropyl alcohol, and antibacterial products.
It also applies to other goods and services including: home heating oil; building materials, including lumber, construction tools, and windows; transportation; freight; storage services; gasoline and other motor fuels; and repair and reconstruction services.
The goods and services listed above are just examples; the statute's protections are not strictly limited to these items.
What if I experienced price increases outside of the city or county where the emergency or disaster is occurring or occurred?
The statute does not restrict its protection to a city or county where the emergency or disaster is located. In addition to applying in the city or county covered by the declaration, it is intended to prevent price gouging elsewhere in the state where there is increased consumer demand as a result of the declared emergency. For example, if a fire in San Diego County causes residents to evacuate to neighboring Imperial County, hotels in Imperial County may not raise rates by more than 10% to take advantage of the increase in demand for lodging.
What if a seller increased the price of a good or service because the seller’s costs of providing the good or service increased?
If the seller can prove that the increased price is directly attributable to increases in the cost of labor or materials needed to provide the good or service, the seller may not be liable under the statute. It's important to note that manufacturers, wholesalers, and distributors must also comply with the statute when selling covered goods or services to a retailer.
How does the statute affect rental housing?
As with all other covered goods and services, following a declaration of emergency, the statute generally prohibits landlords from increasing the price of rental housing by more than 10% of the previously charged or advertised price. For rental housing that was not rented or advertised for rent prior to a declaration of emergency, the price cannot exceed 160% of the fair market value of the rental housing as established by the U.S. Department of Housing and Urban Development.
For rental housing advertised or rented on a daily basis, such as an AirBnB or VRBO listing, the daily price may not be increased by more than 10% following a declaration of emergency. For rental housing advertised or rented on a daily basis prior to a declaration of emergency but offered on a full-time or monthly basis following a declaration of emergency, the price may not exceed 160% of the fair market value of the rental housing as established by the U.S. Department of Housing and Urban Development.
A landlord may not justify an otherwise unlawful price increase by providing additional services such as gardening, cleaning, or utilities, or because they are now offering a shorter lease term. Similarly, a landlord may not charge more than the allowable price because an insurance company offered to pay a higher price.
Finally, the statute also makes it a separate misdemeanor for a landlord to evict a tenant and then re-rent the property at a rate that the landlord would have been prohibited from charging the evicted tenant under the price gouging statute.
Landlords should be aware that in addition to statewide price gouging emergencies, their properties may also be subject to protections as a result of local emergency proclamations or under city or county price gouging ordinances. Likewise, in addition to price gouging protections and statutory statewide rental protections, many cities and counties have enacted additional local rental protections, including rent stabilization and just cause eviction ordinances. Landlords should remain aware of the state and local legal requirements applicable to the cities or counties where their rental properties are located.
What are the consequences of violating the statute?
Violations of the price gouging statute are subject to criminal prosecution that can result in one-year imprisonment in county jail and/or a fine of up to $10,000. Violations are also subject to civil enforcement actions including civil penalties of up to $2,500 per violation, injunctive relief and mandatory restitution.
The Attorney General, local district attorneys, and private individuals can bring actions for violations of the statute.
Can the Attorney General’s office assist me with a claim against someone who price gouged me?
Our office cannot give you legal advice or represent you. If you believe that you might have a claim for price gouging, you might consider contacting an attorney to explore your options. For referral to a lawyer, you may contact the State Bar at (866) 442-2529 (toll-free in California) or (415) 538-2250 (from outside California), or through its website at: http://www.calbar.ca.gov. If you cannot afford to pay an attorney, you may consider contacting your local legal aid office. For a referral, visit http://www.lsc.gov and click on the Find Legal Assistance tab, or go to http://lawhelpca.org.
Should I report price gouging to the Attorney General’s office?
Even though our office cannot represent individuals, the Attorney General may, on behalf of the public, investigate or prosecute someone who has engaged in price gouging. Anyone who has been the victim of price gouging, or who has information regarding potential price gouging, is encouraged to immediately file a complaint with the Attorney General's Office by going to the Attorney General's website or by calling (800) 952-5225.
What can local officials do to help protect consumers against price gouging?
Local officials may extend the statute’s effective period, 30 to 180 days after a declaration of emergency, by additional 30-day periods if they deem it necessary to protect the lives, property, or welfare of citizens.
Additionally, the statute permits local ordinances to prohibit price gouging on their own terms, including imposing more severe penalties.
