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New rules to prevent price gouging proposed: How would it work?

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  • Staff Report 

Attorney General, Letitia James, has proposed rules to prevent corporate profiteering and protect consumers and small businesses. The rules will bolster the enforcement of New York’s price gouging law, which was updated in 2020 to grant the Office of the Attorney General (OAG) rulemaking authority. They will set clear guidelines against price increases during emergencies, making it more straightforward to investigate and combat price gouging. The rules will provide easy-to-administer standards for enforcing the price gouging statute, making it easier for small businesses and consumers to report price gouging, and are open to a 60-day public comment period.

The price gouging law of New York prohibits companies throughout the supply chain from increasing their profits for necessary goods and services during market disruptions. The law was updated in 2020 to empower OAG with rulemaking authority. In March 2022, OAG launched the first-ever price gouging rulemaking process to gather information from consumers and industry experts on how to strengthen and clarify the state’s price gouging statute. The proposed rules announced today are a continuation of Attorney General James’ efforts to protect consumers and are informed by OAG’s decades of experience enforcing the price gouging statute.

The proposed rules include provisions to clarify that a price increase over 10 percent during an abnormal market disruption may constitute price gouging. The proposed rules also prohibit corporations with large market shares from increasing profit margins during abnormal market disruptions. Companies that rely on dynamic pricing will also have clear guidelines to follow, allowing OAG to establish a benchmark using the median price for the same good or service at the same time one week before the emergency or market disruption.

Finger Lakes Partners (Billboard)

The proposed rules also include protections for products or services introduced after a market disruption. Companies that raise their prices by more than 10 percent must provide a record of their costs to justify the price increase. All the proposed rules are available for public review online.

Attorney General James said that her office’s proposed rules would crack down on price gouging and ensure that large corporations do not take advantage of New Yorkers during difficult times. She urged citizens to share their experiences and report any acts of vandalism on their personal property.

The proposed rules are open to a 60-day public comment period. Comments can be submitted by emailing [email protected]. After reviewing public comments, the rules may be promulgated as is or revised upon further analysis. The proposed rules are being led by Special Advisor and Senior Counsel for Economic Justice Zephyr Teachout of the Division of Economic Justice with support from other officials.