The history of price gouging amid US disasters and how different states fight against it
Reports of price gouging have become as frequent as the storms they accompany. Stories emerge as businesses hike up the prices of products that victims desperately need. For years, residents' wallets have been hit hard from airlines, grocery stores, convenience shops, gas stations and other businesses in the wake of natural disasters.
While the increased prices are almost always accompanied by backlash against those companies, it hasn’t stopped the issue from resurfacing every year.
At the cross-section of this debate is the conflict of economics and ethics. The economic argument is that when demand for products skyrockets (like after a disaster) and the supply is stagnant, then prices should rise in order to boost profits.
Motorists line up to get gas in the aftermath of Hurricane Ike in Houston, Monday, Sept. 15, 2008. (AP Photo/Marcio Jose Sanchez)
But ethically, those price hikes have always been met with scorn. For victims of natural disasters, those products are often essential for survival. Critics of price gouging argue that storm victims shouldn’t be penalized for their location of residency.
Some of the most rampant examples of price gouging came during the most destructive storms in recent years, such as Hurricane Katrina, Hurricane Sandy, Hurricane Harvey and Hurricane Irma.
In the wake of Katrina, the consumer protection division of Mississippi fielded nearly 1,400 complaints per day. Countless contractors scammed victims by promising to repair homes then never returning after taking the deposit. A hotel manager was sentenced to five years in prison for boosting prices.
In Louisiana, the office of the Attorney General fielded hundreds of reports from renters complaining about heightened rents following the storm, as some landlords were reportedly trying to use the storm as an excuse to evict poorer tenants.
After Sandy, 185 residents received over $282,000 in reimbursements from hotels, gas stations and hardware stores for price gouging.
In a release after the fines were delivered, Eric Kanefsky, director of the state division of consumer affairs in New Jersey, said “there is no excuse or justification for gouging consumers during a declared state of emergency.”
But despite those examples, price gouging claims only increased after Harvey and Irma. Reports of $20 per gallon of gas and $99 cases of water were cited in Texas, despite Attorney General Ken Paxton’s warnings. Numerous hotels were cited as well, some of which tripled their nightly costs. In the end, 48 businesses paid over $166,000 in civil restitution to Texas residents.
In Puerto Rico, the reports were even more rampant. Cases of water were again selling for $99 while other reports highlighted $3,200 plane tickets. Nearly 8,000 complaints were made following Irma.
Claims of price gouging have followed into 2018, most notably in Hawaii with Hurricane Lane. As some residents and tourists were looking to escape the storm with a flight to California, Delta Airlines faced backlash after a picture was posted on Twitter depicting tickets selling for exponentially more than usual.
However, Delta refuted that claim, saying they didn’t raise any prices. Some have said that an automated algorithm that sets seat prices based on demand and quantity is to blame. Before the storm, Delta instituted fare caps and provided travelers with waivers to allow a one-time change to their travel itinerary without any extra fees.
Throughout the Hawaiian islands, other complaints surfaced, ranging from $25 cases of water to boosted gas prices. The Hawaiian government has a complaint form available for consumers to report any price gouging sightings they’d like to report.
In recent years, states have moved to create anti-price gouging laws and provide resources for storm victims who have faced unusually high prices.
Anti-price gouging laws cover disasters of all sorts, not just storms. These laws have played roles in events such as terrorist attacks like 9/11 and oil refinery fires. There are currently 35 states that have laws against price gouging although nearly all of them vary slightly.
Holes in price gouging laws have emerged, however. For example, claims of price gouging against renters emerged after after Katrina, but Louisiana laws failed to cover housing-related price gouging and victims couldn't be helped. Others have complained that certain state's laws, such as Florida's, aren't specific enough.
Critics of price-gouging laws usually cite that price ceilings allow customers to hoard essentials, like bottled water and batteries. This makes pre-storm shopping more first-come-first-serve rather than spreading out supplies to everyone who needs them.
For gas stations, capping prices have also led to outages in areas, forcing storm victims to drive farther to find open stations.
As the 2018 storm season continues to unfold, the focus of states will remain on helping protect victims against price gouging with resources like report forms and efforts to recoup losses.Report a Typo
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