A.G. Schneiderman Issues Consumer Alert Regarding Price Gouging During Winter Storm In New York State

A.G. Schneiderman Urges New Yorkers to Report Potential Fraud To His Office, Offers Tips To Protect Consumers

  With severe winter weather throughout New York State, Attorney General Eric T. Schneiderman today issued a consumer alert encouraging New Yorkers to contact his office if they experience any potential price gouging for winter weather-related services. New Yorkers can contact the Attorney General's hotline at 518-776-2000 or file a complaint online. 

General Business Law prohibits excessive increases in prices of essential goods and services like food, water, gas, generators, batteries, and flashlights, hotel lodging, and transportation, during natural disasters or other events that disrupt the market. During and after severe winter weather events, these goods and services might also include snow plowing, snow removal from roofs, shovels and other snow removal equipment, salt, and contract services for storm-related damage. In January, after receiving a flood of complaints from across New York State, Attorney General Schneiderman announced an investigation into possible misconduct by propane suppliers across New York, and has encouraged New Yorkers to report any delivery delays or possible price gouging for propane delivery.

“New Yorkers should be wary of fraudsters who use severe winter weather as an excuse to illegally line their pockets,” said Attorney General Schneiderman. “We will not tolerate those who seek to exploit weather emergencies at the expense of New Yorkers. Any New Yorker that believes they may have been the victim of price gouging should contact my office right away.”

New York State’s Price Gouging Law (General Business Law § 396-r) prohibits merchants from taking unfair advantage of consumers by selling goods or services for an “unconscionably excessive price” during an “abnormal disruption of the market.” The price gouging law covers New York State vendors, retailers, and suppliers, including but not limited to supermarkets, gas stations, hardware stores, bodegas, delis, and taxi and livery cab drivers.

The aftermath of winter storms may also necessitate the hiring of contractors to assist with additional snow removal and home repairs. Reports of roof collapses or wind damage and the possibility of flooding from warming temperatures are areas of particular concern.

Consumers should protect themselves when hiring contractors to perform storm-related services by considering the following:

• Shop around. Get at least three estimates from reputable contractors that include specific information about the materials and services to be provided for the job.
• Get it in writing. Insist on a written contract that includes the price and description of the work needed.
• Don't pay unreasonable advance sums. Negotiate a payment schedule tied to the completion of specific stages of the job. Never pay the full price up front.
• Get references. Check with the Better Business Bureau, banks, suppliers, and neighbors. Always contact references provided to you.
• Know your rights. You have three days to cancel after signing a contract for home improvements. All cancellations must be in writing.

New York's price gouging law takes effect upon the occurrence of triggering events that cause an “abnormal disruption of the market.” An “abnormal disruption of the market” is defined as “any change in the market, whether actual or imminently threatened,” that results from triggering events such as “weather events, power failures, strikes, civil disorder, war, military action, national or local emergency, or other causes.” During an abnormal disruption of the market like a major weather event, all parties within the chain of distribution for any essential consumer goods or services are prohibited from charging unconscionably excessive prices. “Consumer goods” are defined by the statute as “those used, bought or rendered primarily for personal, family or household purposes.” For example, gasoline, which is vital to the health, safety, and welfare of consumers, is a “consumer good” under the terms of the statute. Therefore, retailers may not charge unconscionably excessive prices for gasoline during an abnormal disruption of the market.

New York's price gouging law does not specifically define what constitutes an “unconscionably excessive price.” However, the statute provides that a price may be unconscionably excessive if: the amount charged represents a gross disparity between the price of the goods or services which were the subject of the transaction and their value measured by the price at which such consumer goods or services were sold or offered for sale by the defendant in the usual course of business immediately prior to the onset of the abnormal disruption of the market.