Causes.com
| 9.14.18
Should Businesses Be Allowed to Price Gouge During Hurricanes?
Vote to see how others feel about this issue
What’s the story?
- Hurricane Florence has brought a spike in price-gouging complaints in states in its path.
- North Carolina, Virginia, and West Virginia have laws against the practice. But should they? If you support a free-market system, why shouldn’t businesses be allowed to charge whatever price consumers are willing to pay?
What are the laws?
- Virginia's Anti-Price Gouging Act, enacted in 2004, prohibits suppliers from charging "unconscionable prices for necessary goods and services" during the 30-day period following a state of emergency declaration. Goods include water, ice, food, generators, batteries, and home repair materials.
- West Virginia state law prohibits any person, business, or contractor from inflating the price of certain items by more than 10 percent above the prices that were in effect 10 days before the declaration.
- In North Carolina, businesses found to engage in “excessive pricing” can face a $1,000 fine per misdemeanor offense and up to 30 days jail time.
Critics of price gouging
- North Carolina Attorney General Josh Stein told Fox News that his office has received more than 250 complaints of price gouging, the majority of which are related to fuel, bottled water, and hotels.
“What we do is we then call the business to 1. inform them of the law, and 2. find out what there story is,” Stein said. “The law in North Carolina protects against a business charging an unreasonably excessive price.”
- “Price gouging’s illegal because no business should take advantage of people’s desperation. When people are at their lowest, that’s when we should be reaching out – to help folks, not take advantage,” Stein continued.
- Virginia Attorney General Mark Herring issued a statement that price gouging will not be tolerated.
"Taking advantage of natural disasters and exploiting folks for financial gain is against the law and I will work to make sure that those who participate in price gouging are brought to justice," Herring said.
Supporters of price gouging
- On Wednesday, Art Carden, an Associate Professor of Economics at Samford University in Birmingham, Alabama, wrote in Forbes that “preventing price gouging will make Hurricane Florence damage worse.”
- Carden wrote that while it may seem officials are protecting the vulnerable from “vultures who would exploit them,” they’re
“actually making matters worse by shutting down the mechanism - rising prices - that efficiently and effectively dispatches knowledge and information around the world and calls desperately-needed resources to the areas that are likely to be most affected by the storm.”
- In a Harvard Business Review piece titled "The Problem with Price Gouging Laws," Rafi Mohammed said the question of price gouging in not a moral question, but an economic one.
"Doubling the price will make customers think twice about buying another gallon of milk, for example, thus leaving supply for those who didn’t arrive at dawn," Mohammed wrote.
- He also warned that laws against price gouging discourage “businesses from boosting supplies.” If prices are capped, Mohammed wrote, “there’s little incentive for businesses to hustle to increase supplies.”
What do you think?
Is price gouging “unconscionable”? Or is it the free market at work? Should states relax their price-gouging laws? Hurricane Irma is closing in fast: hit the Take Action button, tell your reps what to do, and comment below.
—Josh Herman
What can you do if you experience price gouging?
- North Carolinians who’ve been the victims of price gouging can submit their complaints here.
- Virginians who feel they have been victimized by gas gougers can contact the attorney general's office by clicking here.
- West Virginians can submit complaints about price gouging here.
(Photo Credit: iStockphoto.com / hsun337)
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