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Sunday, April 5, 2020

Attorney General reports rise in price gouging complaints since COVID-19 outbreak

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By Juliette Fairley | Mar 25, 2020


California Attorney General Xavier Becerra issued a consumer alert warning on Tuesday detailing how fraudsters are trying to take advantage of COVID-fears.

"We have received a large volume of consumer complaints regarding price gouging and are reviewing every complaint that our office receives," the Attorney General's press release states.

Consumers should be wary not only of price gouging but also of opportunistic tricksters claiming to have a miracle cure for COVID 19 because there is no cure nor medicine that presently treats or cures coronavirus, according to the AG press release posted online. 

"The alert is about companies that are promoting and selling fake tests and cures," an AG spokesperson told the Northern California Record. "Scams harm all Californians of all ages and all economic circumstances."

Below are details on what constitutes false advertising, price gouging and what to do about it:

1. Deceptive advertising related to novel coronavirus — or COVID-19 — in California.

California’s consumer protection laws — including the Unfair Competition Law, False Advertising Law and Consumers Legal Remedies Act —  prohibit false, deceptive, or misleading advertising, including any advertising that explicitly claims or implies that a product treats the coronavirus, according to the AG's statement.

"Phony cures are insidious," said Brian Kabateck, an attorney with KBK Lawyers. "If someone sells you a cure, it's not only dangerous but also falls under a consumer right. People can pursue those cases for false advertising, which is against the law in California."

2. Price gouging is illegal during the declared state of emergency under Penal Code Section 396.

Price gouging means taking advantage of the marketplace and the public to gain an individual unfair advantage, according to Kabateck.

"A business following the law could have standing to file a lawsuit as well as a District Attorney or consumer who is harmed because they tried to buy milk but it's three times more expensive since the virus outbreak," Kabateck said.

Price gouging is not a way to do business, according to Darrell Feil, chair of the National Federation of Independent Business (NFIB) Leadership Counsel, which represents 15,000 independent and small businesses in California alone.

“It’s a low blow to take advantage of people when they are vulnerable," said Feil, who owns a small landscaping business called Abate-a-weed in Bakersfield. “We advise all member businesses to not participate in it, stay the course and maintain the same margins you’ve always had.” 

Violators of the price gouging statute are subject to criminal prosecution that can result in a one-year imprisonment in county jail and/or a fine of up to $10,000, according to the AG's statement online. They are are also subject to civil enforcement actions including civil penalties of up to $2,500 per violation, injunctive relief, and mandatory restitution.

"The fact that the AG would pursue these cases is valuable and private lawyers might want to pursue them as well," said Kabateck. 

The practice of price gouging involves charging 10% more of the price for an item than before a state or local declaration of emergency and the law applies to the prices of goods or services when a declared state of emergency results in disruptions of the market, including with respect to food, emergency medical supplies and other consumer goods, according to Becerra's statement. 

"I encourage anyone who has been the victim of a snake-oil scam or who otherwise has information about products that are falsely touted as coronavirus treatments, tests or cures to immediately file a complaint through my office’s website," Becerra said.

Californians can report potential price gouging or false advertising by filing a complaint online or by contacting local law enforcement. 

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