Criminal Price Gouging During COVID-19

Introduce a little anarchy, upset the established order and everything becomes chaos. In the wake of the coronavirus health pandemic, North Carolina has experienced what has been coined, “COVID Chaos.” Arguably the most notable COVID chaos can be seen in your local grocery store. Once bustling with product, the aisles of supermarkets statewide are becoming increasingly empty, leading stores to implement purchase limits on certain items – such as toilet paper, cleaning supplies, eggs, and more. The lack of available products has led to online bidding wars where people are spending thousands of dollars for items that cost less than ten dollars a piece pre-COVID.

For those unable to spend such vast amounts on these sparse items, it is unfortunately just a waiting game. Take solace however in the fact that your local supermarket and other companies cannot charge obscene amounts for items in a time of crisis in North Carolina, at least not legally.

Price gouging, or charging too much in times of crisis, is against North Carolina law when a disaster, an emergency or an abnormal market disruption for critical goods and services is declared or proclaimed by the Governor or a municipality. Price gouging is defined under North Carolina law (Chapter 75-38) as charging “a price that is unreasonably excessive under the circumstances.” The law does not define a set price or percentage increase, so the law can apply to different products and services in times of crisis. Due to the current coronavirus pandemic and the Governor’s declaration of a state of emergency on March 10, 2020, the North Carolina price gouging law is currently in effect.

The state Attorney General’s Office, under the law, can put a stop to price gauging and seek refunds for consumers who fall victim to price gauging practices. Civil penalties may be imposed by the courts against price gougers of up to $5,000 for each violation. From the manufacturer to the distributor to the retailer, North Carolina’s anti-price gouging law applies to all levels of the supply chain.

On May 4, 2020, North Carolina had its first price gouging lawsuit following the issuance of the coronavirus state of emergency. Attorney General Josh Stein has sued A-1 Towing Solutions, a Charlotte based company. The State claims that A-1 Towing Solutions, Inc., engaged in predatory towing, price gouging, and related unfair or deceptive acts or practices, and unlawful debt collection practices. According to the State, the defendants have engaged in an ongoing practice of:

• Improper and predatory booting or towing of trucks that were deployed for delivering food, water or needed medical supplies during a time of crisis, notwithstanding that the trucks’ drivers had obtained the express permission of the property owners or lessors to park their rigs;
• Forcing drivers to pay exorbitant amounts – up to $4,400 each – for release of their rigs; and
• Engaging in other unfair or deceptive acts or practices, such as double-booting both the tractor and the attached trailer as a pretext for doubling the price demanded for removing the obstruction, and threatening to greatly increase the fees or charges for release of the vehicle unless the drivers promptly pay the demanded amounts.

The States prompt response to reprimand the practice of price gauging employed by the defendant has set a precedence of intolerance for such behavior in North Carolina. In a statement, Attorney General Stein said, “[a]ny would-be price gouger should take note – my office will hold you accountable for harming people in this time of crisis.”

While this is the first lawsuit alleging the practice of price gauging in North Carolina in the midst of the coronavirus health crisis, it is not the first complaint. Since the issuance of the state of emergency by Governor Roy Cooper, the state Attorney General’s Office has received roughly 1,763 complaints of price gouging throughout North Carolina.

If you think you have fallen victim to price gouging, be sure to collect evidence – this can be done by either taking a picture of the price, purchase receipt, etc. When filing a complaint, you will be prompted to fill out a section specifying the businesses name, the business address, and product details. In North Carolina, price gouging complaints can be made online through the NC Department of Justice website. If you have concerns that you may have been a victim of price gouging it is important to talk with a knowledgeable attorney as soon as possible.

Note that there is a difference between a product being expensive and a product falling under the price gouging guidelines. If the item is something necessary, like water, disinfectants, gasoline, or toilet paper, then it falls under the category of items afforded protection against price gouging. There are some exceptions however, in the case that an item costs more to overnight ship, the seller may raise the price. If the rise is substantial, making the price unreasonable, then the justification for price increase is invalid and considered to be price gouging. Unfortunately, price gouging may be occurring during this pandemic. If you believe that you have experienced price gouging, contact the experienced attorneys at Arnold & Smith, PLLC today to schedule a consultation to discuss your rights and options.