By: Olivia Fox
Natural disasters are inevitable, but the exploitation of vulnerable communities in their wake should not be. As climate change accelerates the frequency and power of hurricanes and other natural disasters, people across the United States find themselves constantly struggling with emergencies.[i] In these challenging times, one pressing issue exacerbates the burden on affected families: price gouging.[ii] In anticipation of Hurricane Helene, Hurricane Milton, and other potential natural disasters, the Biden administration warned against price gouging during natural disasters, highlighting the need for corporate responsibility, ethical practices, and fair consumer protection.[iii] Despite stern warnings, hundreds of price gouging complaints have already been filed by people affected by these recent horrific storms.[iv]
The Problem of Price Gouging
Price gouging is the practice of raising prices for essential goods or services to an unreasonable level during a state of emergency, often to exploit the desperation of consumers.[v] These essential items may include necessities such as food, water, housing, and fuel.[vi]
A commonly overlooked aspect of price gouging is that it does not just occur after a storm hits but can happen in the days and even weeks leading up to a disaster.[vii] As hurricanes approach, demand for essential supplies like water, gasoline, and generators soar, and retailers often take advantage of this panic-driven rush.[viii] This creates an incredibly difficult dilemma for consumers. Knowing that a storm is imminent, they must face the urgent need to prepare while being confronted with prices that stretch their financial resources. For example, in anticipation of Hurricane Milton, there was an Airbnb listing of a “room in Tallahassee” priced at $6,000 a night.[ix] Additionally, United Airlines was accused of price gouging for flights out of Florida costing thousands of dollars compared to other airlines charging between $400 and $600 for the same flight.[x] For many consumers, the choice is agonizing: pay inflated prices or risk unpreparedness of a natural disaster.
A Legal Overview
Most states in the U.S. have their own statutes governing price gouging, and most laws are triggered when a state of emergency is declared.[xi] In Florida, for example, it is unlawful to rent or sell essential commodities, dwelling units, or self-storage facilities at unconscionable prices within the area of a declared state of emergency for up to 60 days, extendable by the Governor.[xii] Despite the facial simplicity of these laws, enforcing them is anything but straightforward. Most states, including Florida, use vague terms like “unconscionable” price increases or “gross disparity” in prices compared to pre-disaster levels, leaving much room for interpretation.[xiii] This ambiguity can hinder enforcement efforts, as businesses may claim that price increases are necessary due to increased supply chain disruptions and spikes in demand.[xiv]
Enforcement Challenges
The Biden administration’s warnings ahead of Hurricanes Helene and Milton underscore the difficulty involved in enforcing these laws.[xv] In theory, laws against price gouging should prevent businesses from exploiting consumers during times of crisis. However, enforcement can be challenging.
One of the primary factors making enforcement elusive is the scope of investigations required. Natural disasters affect large geographic areas, and price gouging can occur across numerous sectors, including retail, fuel, and housing.[xvi] Additionally, the complexities extend across state lines. In today’s interconnected economy, many goods sold in a state affected by a disaster are sourced from out of state.[xvii] This raises concerns about jurisdiction and enforcement. Investigating and prosecuting price gouging cases often requires coordination between both state and federal authorities.[xviii]
States typically rely on consumer complaints to identify violations, which is reactive rather than proactive. [xix]After storms, thousands of complaints can be filed, making it a struggle to address each one efficiently and effectively. [xx] Hundreds of price gouging reports have been filed since Hurricanes Helene and Milton. [xxi] Even if consumers realize they are being overcharged, reporting price gouging before a storm is essentially futile. With natural disasters, time is of the essence, and people cannot afford to wait for authorities to investigate and resolve a complaint while they await a natural disaster.[xxii]
Ahead of Hurricanes Helene and Milton, the Biden administration took a proactive stance against price gouging, issuing strong warnings to businesses and voicing a commitment to prosecuting violations. [xxiii] The Federal Trade Commission and State Attorneys Generals were urged to crack down on price hikes on essential goods.[xxiv] While warnings are a step in the right direction, they also highlight the limitations of existing enforcement procedures. As mentioned, there are no federal price gouging laws, so enforcement largely falls to the states, each with its own rules and thresholds.[xxv] This fragmented approach leads to inconsistent enforcement, with some states pursuing cases aggressively while others may not. [xxvi]
The challenges in enforcing price gouging laws reveal broader issues within the legal framework for consumer protection during natural disasters. A federal price gouging law, or at least stronger federal guidance could create a more consistent enforcement procedure to help address cross-border issues.[xxvii] Such a law could also standardize the definitions of terms like “unconscionable” price increases, making prosecution more straightforward and ensuring consumers are protected during vulnerable times.
Conclusion As natural disasters become more frequent and severe, it is crucial that communities can trust businesses to act ethically in times of crisis. Price gouging remains a persistent problem before, during, and after natural disasters, and the failure to effectively enforce these laws leaves vulnerable communities at risk. While the Biden administration’s warnings in the wake of Hurricanes Helene and Milton demonstrate a facial commitment to handling the issue, the challenges of investigation and prosecution remain weighty. Without stronger enforcement practices, vulnerable populations will continue to bear the brunt of price gouging, exacerbating the inequalities that disasters often expose. The road to recovery is long and arduous after a storm but implementing appropriate safeguards can ease the path for communities as they rebuild and recover from these traumatic events.
[i] Daniel Vernick, Is Climate Change Increasing the Risk of Disasters?, World Wildlife Found. (Oct. 02, 2024), https://www.worldwildlife.org/stories/is-climate-change-increasing-the-risk-of-disasters.
[ii] Supply and Demand or Price Gouging? An Ongoing Debate, Harv.Bus. Rev. (Apr. 01, 2020), https://online.hbs.edu/blog/post/supply-and-demand-or-price-gouging-an-ongoing-debate#:~:text=Price%20Gouging%20During%20Natural%20Disasters,Emergency%20supplies.
[iii] Biden Administration Warns of Price Gouging Risks Ahead of Hurricane Milton’s Landfall, Competition Pol’y International. (Oct. 09, 2024), https://www.pymnts.com/cpi-posts/biden-administration-warns-of-price-gouging-risks-ahead-of-hurricane-miltons-landfall/.
[iv] Residents in Hurricane-affected States are Complaining of ‘Price Gouging.’ What is it?, NPR. (Oct. 12, 2024, 8:05 AM), https://www.npr.org/2024/10/12/nx-s1-5150153/residents-in-hurricane-affected-states-are-complaining-of-price-gouging-what-is-it.
[v] Harv. Bus. Rev., supra note 2.
[vi] Id.
[vii] Alexa Herrera, Price Gouging: What You Should Know Ahead of Hurricane Milton, wtsp. (Oct. 07, 2024, 11:30 PM), https://www.wtsp.com/article/weather/tropics/price-gouging-what-to-know-hurricane-milton/67-283a694c-ad48-4656-8da6-9c7c50ee5a12.
[viii] FTC, DOJ, and CFPB Warn Consumers About Potential Scams and Price Gouging in the Wake of Hurricanes and other Natural Disasters, Fed. Trade Comm’n., (Oct. 09, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/10/ftc-doj-cfpb-warn-consumers-about-potential-scams-price-gouging-wake-hurricanes-other-natural.
[ix] Ana Goñi-Lessan, Over 200 Price Gouging Complaints in Florida about Fuel, Water Ahead of Hurricane Milton, Tallahassee Democrat, (Oct. 08, 2024, 6:05 PM), https://www.tallahassee.com/story/news/hurricane/2024/10/08/over-200-price-gouging-complaints-in-florida-ahead-of-hurricane-milton/75577858007/.
[x] Craig Garrett, United Airlines Accused of Price Gouging as Florida Travelrs Try to Flee Hurricane Milton, (Oct. 10, 2024, 3:20 PM), https://www.msn.com/en-us/travel/news/united-airlines-accused-of-price-gouging-as-florida-travelers-try-to-flee-hurricane-milton/ar-AA1rUzDf?ocid=msedgntp&pc=HCTS&cvid=e5cdb86787764de087b07105e96e690a&ei=4.
[xi] Rachel Blakely-Gray, All You Need to Know About Price Gouging Laws by State, Patriot Software, (June 23, 2020), https://www.patriotsoftware.com/blog/accounting/price-gouging-laws-by-state/.
[xii] Fla. Stat. § 501.160 (2024).
[xiii] John Ingrassia, Proskauer, Price Gouging Compliance, BL., (June 2022), https://prfirmpwwwcdn0001.azureedge.net/azstgacctpwwwct0001/uploads/380646bc2d6c41967eb590ebe863841a.pdf.
[xiv] Harv. Bus. Rev., supra note 2.
[xv] Competition Pol’y International., supra note 3.
[xvi] BL., supra note 13.
[xvii] NPR, supra note 4.
[xviii] Craig Carpenito, Daniel Young (Yong Woo) Kim, Noah Childrey, The Federal Response to Hoarding and Price Gouging During the COVID-19 Pandemic, Am. Bar Ass’n.,(Aug. 10, 2022), https://www.americanbar.org/groups/government_public/publications/public-lawyer/2022-summer/the-federal-response-hoarding-and-price-gouging-during-covid19-pandemic/.
[xix] Mauricio Maldonado, You Paid How Much? Here’s How to Report Price Gouging, CBS News, (Oct. 9, 2024, 3:33 PM), https://www.cbsnews.com/miami/news/florida-officials-crack-down-on-price-gouging-as-hurricane-milton-approaches/#:~:text=Violators%20face%20penalties%20of%20up,joining%20the%20fight%20against%20exploitation.
[xx] Id.
[xxi] Tallahassee Democrat, supra note 9.
[xxii] Fed. Trade Comm’n., supra note 8.
[xxiii] Id.
[xxiv] Id.
[xxv] Patriot Software, supra note 11.
[xxvi] Id.
[xxvii] Am. Bar Ass’n., supra note 18.
