New York City Comptroller’s Office Releases Audit of DCWP’s Inspections of Early Pandemic Price-Gouging

 

DCWP received 5000+ complaints in March 2020 regarding inflated PPE and hand sanitizer prices, stretching the agency's ability to protect consumers

 The New York City Comptroller’s Office released an audit that found that the Department of Consumer and Worker Protection (DCWP) was overwhelmed by the volume of price-gouging complaints for PPE and other essential products at the onset of the COVID-19 pandemic. DCWP received 38,010 complaints from March 2020 – February 2021, an 114% increase from the previous, pre-pandemic year. DCWP received 5,497 complaints in the month of March 2020 alone. The audit – spanning March 4th-November 16th, 2020 – found that DCWP investigated twenty-eight percent of price gouging complaints it received, and it took an average of forty-three days to conduct those inspections.

To address the spike in prices of essential goods that were in short supply, DCWP declared an emergency rule making it illegal to raise prices by ten percent or more on essential products needed to prevent the spread of the coronavirus, including face masks, hand sanitizer, disinfectant wipes, and other personal and household goods on March 15, 2020. According to a DCWP press release, most of the price gouging complaints came from Black and Latinx neighborhoods hit hardest by the pandemic. Some of the most egregious pricing violations found were selling an eight-ounce bottle of hand sanitizer for $28, $300 for a ten-pack of face masks, and $20 for one N95 face mask.

“As we move towards understanding how to live with this pandemic and brace ourselves for future crises, our City agencies must be at the ready to protect New Yorkers over those gaining to profit from their fears and pains,” said Comptroller Brad Lander. “I appreciate the incredible hardship our agencies, including DCWP, went through at the onset of the pandemic to safeguard New Yorkers from the pandemic and unscrupulous profiteers. These recommendations will better arm NYC with the tools needed to protect consumers in moments of emergency, whether that is the next COVID variant or the next superstorm.”

At the time the emergency price-gouging rule was established, the fine was set at $350 per item or service. DCWP established a permanent rule prohibiting price gouging on any products or services essential to health, safety, and welfare during a declared state of emergency in June 2020. As of January 2022, the fine is now $525 for the first violation, $1050 for a second violation, and $3500 for a third violation.

In its response to the audit findings, the agency committed to using the recommendations to improve implementation of this rule to be better prepared for future emergencies:

• Formalize criteria for its price gouging enforcement– including conducting initial inspections within DCWP’s own 35-day window of receiving complaints.
• Create an independent review process for its complaint inspection and selection determinations.
• Establish criteria on how often to inspect businesses with multiple complaints.
• Develop timeframes for resolving price gouging complaints and enact performance measures with inspections and follow-ups.

Read the audit report here.