HB24-1010 Prohibition Against Engaging in Price Gouging
Under current state law, sellers of consumer “necessities” may not increase prices more than 10% above the rolling 90-day average as result of a declared natural disaster. Sellers may be relieved of charges of price gouging if they can demonstrate supply chain increases are directly tied to a disaster declaration. “Necessities” are defined as goods and services necessary for human or animal survival during a disaster period.
As introduced, HB1010 strikes the limitation to periods of declared disasters while expanding the definition of necessities to include all goods and services necessary for the health, safety, and welfare of consumers or the general public. The bill does not contain language defining or limiting penalties to be assessed against parties found guilty of price gouging.
In essence, future interpretations of “price gouging” could be applied toward virtually anyone operating within the marketplace attempting to raise prices by 10%, or more, should the buyer successfully argue the service is necessary for their own welfare.
On its surface, the expansive nature of this bill is untenable and ripe for further abuse of consumer protections.
Key Notes:
- HB1010 introduces an ambiguous scope of covered goods and services that will be left to the courts to define. The effective range for applying the definition of price gouging amounts to an extraordinary intrusion upon commercial activities.
- Directing the Office of the Attorney General and courts to determine the existence of price gouging, resulting harms, and assessment of penalties presents an unlimited risk to what might otherwise be considered the normal course of price setting of goods and services.
- The application of a 10% increase standard appears arbitrary and lacks context. For low-cost goods and services, inflationary adjustments greater than 10% may be necessary to offset the absolute cost of handling and delivery beyond the base price.
- Frivolous and defamatory claims under HB1010 inflict significant reputational and commercial injury to sellers. HB1010 provides no relief for sellers as a result of false claims nor discourages plaintiffs from pursuing false claims.
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