According to numerous reports in the media, the Covid-19 virus, aka the Coronavirus, has spawned price gouging by sellers of a variety of products in high demand and short supply. The Office of the Attorney General for the State of Connecticut has received hundreds of complaints about large price hikes for basic consumer products, and the Attorney General has vowed to take “aggressive action” to address the problem, which has also drawn the same response on the federal level. That said, certain fundamental questions arise about what is and what isn’t price gouging, what laws define and prohibit the practice, what penalties profiteers face, and what remedies victims of price gouging have.
What is Price Gouging?
Essentially, price gouging occurs when, during a declared state or national emergency, a seller unjustifiably increases the retail price of an item for sale. While Conn. Gen Stat. s 42-230 does allow price increases which occur “during the normal course of business,” the issue now focuses on what constitutes an “unjustifiable” price increase. Most other states have similar prohibitions, but no federal law has yet been enacted. As noted, the prohibition in Connecticut applies only during a disaster emergency declared by the Governor or by the President.
What Price Gouging Laws Are There in Connecticut?
Under Conn. Gen. Sat. s 42-230, “[n]o person, firm or corporation shall increase the price of any item which such person, firm or corporation sells or offers for sale at retail at any area which is the subject of any disaster emergency declaration issued by the Governor pursuant to Chapter 517 . . . .” On March 10, 2020, Connecticut’s Governor Ned Lamont signed and issued a “Declaration of Public Health and Civil Preparedness Emergencies” pursuant to Sections 19a-131a and 28-9 of the Connecticut Statutes, thereby invoking the price gouging prohibition as Section 28-9 is in Chapter 517.
Notably, not all price increases are prohibited. Section 42-230 contains an important caveat: “Nothing in this section shall prohibit the fluctuation in the price of items sold at retail which occurs during the normal course of business.” The statute does not address wholesale market transactions and does not define or explain “fluctuation” of prices or “normal course of business.”
What are the Possible Penalties For Profiteering
Section 42-230 states that “[a]ny person, firm or corporation which violates any provision of this section shall be fined not more than ninety-nine dollars” and “[a]ny violation of the provisions of this section shall be deemed an unfair or deceptive trade practice under subsection (a) of section 42-110b.” The $99 penalty may seem paltry, but possible penalties and costs under the Connecticut Unfair Practices Act (CUTPA) can be substantial as the Act exposes a violator to a civil action for damages, including punitive damages, equitable remedies, the possibility of a class action, and payment of the victim’s reasonable attorney’s fees.