What Counts As Price Gouging Under Consumer Law?

Price gouging is generally defined under consumer law as the act of raising prices on essential goods or services to an unreasonable or excessively high level during emergencies or crises. Here are key elements that typically count as price gouging:

Definition and Criteria

1. Context of an Emergency:
   • Price gouging laws usually apply during declared emergencies, such as natural disasters, public health crises, or other situations that disrupt the normal supply chain and demand.
2. Unjustifiable Price Increases:
   • A price increase is considered gouging if it is significantly higher than the prices charged prior to the emergency. While specific thresholds vary by state, common indicators include:
     • Increases of 10% or more, though some states have stricter definitions.
     • Prices that are substantially above market value or the typical selling price during non-emergency conditions.
3. Essential Goods and Services:
   • Price gouging laws often focus on essential goods and services, including:
     • Food, water, medical supplies, gasoline, and other critical items.
   • The classification of what constitutes an essential good may vary by jurisdiction.
4. Intent to Exploit:
   • While not always necessary to prove, evidence that a business deliberately raised prices to exploit consumers' needs during an emergency can strengthen a case of price gouging.
5. Lack of Justification:
   • Businesses may claim increased costs of goods or supply chain disruptions as justification for price hikes. However, if these increases are not substantiated and appear excessive relative to the situation, they may still be classified as gouging.

Example

In many states, if a retailer sells bottled water at $10 per case during a heatwave or natural disaster—when the usual price is around $5—this could be considered price gouging, especially if there’s no substantial justification for the increase.

In summary, price gouging under consumer law is characterized by significant, unjustifiable price increases on essential goods during emergencies. The specific definitions and thresholds can vary by state, so understanding local laws is essential for accurate identification and reporting.