Md. AG to Testify Against Price Gouging in Emergencies

February 8, 2005

Maryland Attorney General J. Joseph Curran, Jr. will testify in support of a bill proposed in the General Assembly that would prevent sellers from price-gouging during a declared state of emergency.

” The law would prevent retailers, home improvement contractors and others from hiking prices, simply out of greed, on items the public needs after a hurricane or other disaster, or during a public health crisis or any other state of emergency,” Curran said. The Attorney General said that Maryland law failed to provide protections for consumers who were victims of price gouging following tornadoes in Southern Maryland and Hurricane Isabel.

Senate Bill 353, sponsored by Senator Leo Green of Prince George’s County, was to be heard Tuesday, Feb. 8 in the Senate Judicial Proceedings committee. The bill would prevent a person from selling essential goods and services for a price that is more than 10 percent higher than was charged 14 days prior to the state of emergency. Those goods and services include food items, consumer goods or services, emergency supplies, medical supplies or equipment, home heating oil, building materials, housing (including hotels and motels), transportation, freight and storage services gasoline, and other commodities important to the health, safety or welfare of the public.

The proposed law would also make it illegal, during a state of emergency and for 180 days following, for a contractor to sell repair, reconstruction or emergency cleanup services for a price of more than 10 percent higher than was charged prior to the state of emergency.

The bill is based on laws in effect in nearly 30 other states that prohibit price gouging.

The state of emergency would include: a state of emergency declared by the Governor of Maryland or by the President of the United States; a “red” condition declared by the U.S. Department of Homeland Security or the Maryland Emergency Management Agency; a catastrophic health emergency proclaimed by the Governor; or a declaration by any of several entities that there is a shortage of essential goods or services.

Violators would be guilty of a misdemeanor and could be sentenced to up to a year in prison or be subject to a fine of up to $1,000, or both. Price increases would not be illegal if the retailer was able to prove that the increase was directly attributable to costs imposed by the supplier, or to additional costs for labor or materials used to provide the services, provided that the price was no more than 10 percent above the total of the cost to the seller plus the markup customarily applied by the seller in the usual course of business.

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