The hallmark of a free enterprise system is a structure where individuals are free to set the pricing on the products they sell. It is then up to buyers to determine if that is an acceptable price. In theory, if the price is too high, then buyers won’t buy and the seller will either have to lower their price or wait until the market changes. Generally, markets change over time and pricing is usually determined by supply and demand.
But what about pricing during an emergency? On one hand, having the ability and/or foresight to accumulate an in-demand commodity during a shortage is the ultimate goal in capitalism. But on the other hand, what if those in-demand commodities affect health or safety? Should the rules of the free market still apply?
According to the laws in North Carolina and South Carolina, the answer is no. Both states have laws in effect that prohibit “price gouging” in times of emergency. Some of the specifics of both States’ laws are provided below.
North Carolina – N.C.G.S. § 75-38
- Considers it an unfair and deceptive trade practice to sell/rent/offer to sell or rent any good or service which is consumed or used as a direct result of an emergency or used to preserve/protect life, health, safety or economic well-being of persons or their property with the knowledge and intent to charge a price that is unreasonably excessive under the circumstances.
- Applies to all parties in the chain of distribution
- Applies in any area where a disaster or state of emergency has been declared or where there is an “abnormal market disruption”
- The determining factor is whether the price offered is “unreasonably excessive.” North Carolina looks at three factors to determine if it is unreasonably excessive:
- Was the seller’s price the result of additional costs imposed by the seller’s supplier or some other expenses resulting from the triggering event?
- Does the seller’s price exceed the seller’s average price in the 60 days preceding the triggering event?
- If the seller did not offer the product before the triggering event, is the seller’s price consistent with the average selling price that others were offering that product or service in that trade area?
- Is the seller’s price attributable to market fluctuations or trends or to costs and risks associated with procuring the product for sale?
- Law allows criminal penalties and fines and civil penalties of up to $5,000 per violation
South Carolina – S.C. Code Ann. § 39-5-145
- Considers it an unfair trade practice to sell or offer to sell a commodity at an unconscionable price during an emergency situation or abnormal disruption of the market.
- Prices that are approved by an appropriate government agency or are the result of usual and customary seasonal fluctuations do not violate the law.
- Does not apply to growers, producers, or food processors, except for retail sales of those products directly to the ultimate consumer.
- Law allows criminal penalties and fines and civil penalties of up to $5,000 per violation.
So whether you are in North Carolina or South Carolina, there are laws on the books to protect you in times of emergency, such as now with the COVID-19 pandemic. Despite these laws, opportunistic individuals are still out there looking to make money off those in need of critical supplies.
As of this writing, there have already been 72 price gouging complaints filed with the North Carolina Attorney General’s office. According to the AG’s office, hand sanitizer, fuel and cleaning products have been the items with the most complaints.
- In North Carolina, you can report price gouging by completing a form at https://ncdoj.gov/file-a-complaint/price-gouging/ or you can call 877-5-NO-SCAM.
- In South Carolina, complaints of price gouging, along with examples and/or supporting documentation should be sent via email to the Attorney General’s office at email@example.com or by calling 803-737-3953.
We are currently in the midst of an extraordinary time that will hopefully not be repeated in the near future. While common decency and morals should prevent price gouging during times like this, the unfortunate reality is that there will always be opportunistic people out there who are more than willing to take advantage of others, no matter what the repercussions are. The best way to end this practice is to bring these practices to light by reporting these bad actors to your state attorney general’s office and by publicizing their actions so that once the emergency is over, their actions will be known by those in the community.
If you have been the victim of unlawful price gouging in North or South Carolina you can also contact the Law Offices of Jason E. Taylor as we may be able to assist you with a claim.