One thing you never want to do is take advantage of your customers, especially during national emergencies. But sometimes, you may need to increase your prices to keep up with demand or inflation. Where do you draw the line between a standard price increase and price gouging?
Not only can price gouging result in penalties, but it can also harm your small business reputation. To prevent it, learn what it is, price gouging laws by state, and how to stay compliant.
What is price gouging?
Price gouging is when a seller significantly and excessively raises the pricing of their products or services. Some businesses may price gouge when there’s a sharp uptick in demand, a shortage of supplies, or both. The majority of states have laws stating that price gouging is illegal during a disaster or state of emergency. Price gouging laws are a type of consumer protection.
To combat price gouging, a number of states actively monitor supply, demand, and company prices before and during disasters or emergencies. And, consumers can report businesses to their Attorney General’s office (usually) if they suspect price gouging.
Price gouging is not when you reasonably raise your prices to keep up with inflation. Some consumers may angrily accuse you of price gouging, but this is not the correct term.
There have been thousands of price gouging complaints during the coronavirus pandemic. Here are some examples of actual price gouging situations during COVID-19:
- $3,799: 15 N95 face masks
- $10: 1 gallon of milk
- $79.99: 36 rolls of toilet paper
Price gouging laws by state
Although there isn’t a federal law against it, the majority of states have anti-price gouging laws. And, some states without laws explicitly against price gouging can issue executive orders to prohibit the action during times of emergency (e.g., coronavirus).
State price gouging laws can vary by:
- What is considered price gouging
- When price gouging laws apply
- Products or services the law applies to
- Lookback period for price comparisons before and during emergency declaration
- Penalty type (fines or jail time) and amount
So, which states have price gouging laws, and what are they?
The following states do not have price gouging laws in place:
| Alaska | Montana | North Dakota |
| Arizona | Nebraska | Ohio |
| Colorado | Nevada | South Dakota |
| Delaware | New Hampshire | Washington |
| Minnesota | New Mexico | Wyoming |
Keep in mind that states without price gouging laws may still take efforts to prevent price gouging, especially during national emergencies. For example, Ohio has state laws that ban “unconscionable sales practices” but not a law specifically against price gouging.
The remaining states do have price gouging laws. Read on to learn the basics of the price gouging laws by state.
Alabama
Alabama’s price gouging law is known as the “Alabama Unconscionable Pricing Act.” It is triggered in a state of emergency.
Here are some basic facts about the law:
- What is considered price gouging: 25% or more price increase
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: All
- Lookback period for price comparisons: 30 days prior to declared state of emergency
- Penalty: Civil penalty of $1,000 per violation; maximum $25,000
Arkansas
Arkansas’ Act 376 of 1997 makes price gouging illegal during a state of emergency.
Take a look at what Arkansas’ price gouging law includes:
- What is considered price gouging: More than 10% price increase
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: Anything needed during an emergency
- Lookback period for price comparisons: Pre-emergency price
- Penalty: Up to a $10,000 penalty, plus restitution to consumers, costs, injunctive relief, attorneys’ fees, and possible criminal sanctions
California
California’s anti-price gouging statute is included in the Penal Code Section 396. Here’s what to know about the state’s law:
- What is considered price gouging: 10% price increase
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: All major necessities
- Lookback period for price comparisons: Before the emergency is declared
- Penalty: Up to a $10,000 penalty, one year of jail time, or both; also subject to civil penalties of up to $2,500 per violation, injunctive relief, and mandatory restitution
Connecticut
Although Connecticut has a price gouging and profiteering law, details about it may vary on a case-by-case basis and are left up to the state. Connecticut’s law goes into effect during certain types of declared emergencies.
To learn more about the state’s law, visit Connecticut’s Department of Consumer Protection website.
D.C.
D.C.’s law goes into effect during a state of emergency. Here’s what it contains:
- What is considered price gouging: More than 10% price increase
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: All
- Lookback period for price comparisons: 90 days prior to the declaration
- Penalty: $5,000 per violation
Florida
Florida’s price gouging law is under Florida Statute 501.160.
- What is considered price gouging: “Gross disparity” between prices before and during a state of emergency
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: Essential goods and services
- Lookback period for price comparisons: 30 days before the state of emergency declaration
- Penalty: $1,000 per violation, maximum $25,000 for multiple violations in a 24-hour period; violators can also be charged with a second-degree misdemeanor
Georgia
Georgia’s price gouging law is governed under the Georgia Department of Law, Consumer Protection Division:
- What is considered price gouging: Price increases that don’t accurately reflect an increase in the cost to make or transport the item
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: “Goods and services ‘necessary’ to preserve, protect, or sustain the life, health, or safety of persons or their property”
- Lookback period for price comparisons: 10 days before the state of emergency declaration
- Penalty: $2,000 – $15,000 per violation
Hawaii
Hawaii’s anti-price gouging law, Section 127A-30, HRS, triggers when there is an emergency declaration. Take a look at the main points:
- What is considered price gouging: Any price increase
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: Goods/commodities
- Lookback period for price comparisons: Before the emergency is declared
- Penalty: $500 – $10,000 fines per day, per violation
Idaho
The Idaho Consumer Protection Act has a statute devoted to preventing price gouging. Check out the lowdown on Idaho’s price gouging rules:
- What is considered price gouging: Exorbitant or excessive price increases
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: Fuel, food, drugs, or water
- Lookback period for price comparisons: Before the declaration
- Penalty: $5,000 per violation, plus restitution and injunctive relief
Illinois
Illinois’ price gouging law, Motor Fuel Fair Marketing Practices Act, kicks in during a market emergency:
- What is considered price gouging: Pricing above the regional Oil Price Information Service average on the previous day for unleaded regular gasoline or No. 2 low sulfur clear diesel fuel, plus $0.25 per gallon, and $0.04 per gallon transportation expense
- When price gouging laws apply: During a market emergency
- Products or services the law applies to: Motor fuel
- Lookback period for price comparisons: Before the disaster
- Penalty: $1,000 per violation
Indiana
Indiana’s Fuel Price Gouging Law prohibits price gouging on fuel products during a state of emergency:
- What is considered price gouging: “Unconscionable” prices, based on gasoline prices
- When price gouging laws apply: State of emergency (disaster/emergency powers or energy emergency)
- Products or services the law applies to: Fuel products
- Lookback period for price comparisons: Seven days before the declaration of the state of emergency
- Penalty: $1,000 fine per transaction, plus restitution and injunctions
Iowa
Iowa’s law against price gouging is included under the Consumer Fraud Act, Iowa Code section 714.16. Here’s what it says:
- What is considered price gouging: “Excessive prices” on merchandise
- When price gouging laws apply: During a state of emergency and recovery period
- Products or services the law applies to: All
- Lookback period for price comparisons: Immediately before the onset of the emergency
- Penalty: Up to $40,000
Kansas
The Kansas Consumer Protection Act does not allow “unconscionable” price gouging and profiteering from disaster:
- What is considered price gouging: More than 25% price increase
- When price gouging laws apply: During a state of emergency or disaster
- Products or services the law applies to: Necessary property or services
- Lookback period for price comparisons: Business day before the disaster
- Penalty: Up to $10,000 per violation
Kentucky
Here’s a rundown on Kentucky’s laws against price gouging:
- What is considered price gouging: Price increases that are “grossly in excess of the price prior to the declaration”
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: All
- Lookback period for price comparisons: Before the state of emergency declaration
- Penalty: Up to $25,000 for multiple price gouging violations within a 24-hour period and restitution
Louisiana
Want the scoop on Louisiana’s laws? Take a look at the basics:
- What is considered price gouging: “Increase in prices or value for goods and services that are higher than the prices ordinarily charged for comparable goods and services”
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: All
- Lookback period for price comparisons: Immediately before the time of a state of emergency
- Penalty: $500 fine, six months in prison, or both; higher fines for actions that result in death
Maine
Maine’s law prevents profiteering during emergency situations. Here are some basic facts about the state’s law:
- What is considered price gouging: More than 15% increase
- When price gouging laws apply: During an abnormal market disruption
- Products or services the law applies to: Necessities
- Lookback period for price comparisons: Immediately before the abnormal market disruption
- Penalty: Up to $10,000
Maryland
Maryland’s anti-price gouging statute protects consumers against the action:
- What is considered price gouging: More than 10% price increase
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: Necessities
- Lookback period for price comparisons: Before the state of emergency declaration
- Penalty: $10,000 per violation
Massachusetts
Massachusetts’ price gouging law is triggered during an emergency situation:
- What is considered price gouging: An “unconscionably high price”
- When price gouging laws apply: During a statewide or national emergency
- Products or services the law applies to: Goods and services necessary for public health and safety
- Lookback period for price comparisons: Before the state of emergency
- Penalty: Contact the state for information on penalties
Michigan
Michigan’s Consumer Protection Act has a price gouging rule that applies all the time, whether there’s a declared emergency or not:
- What is considered price gouging: A “grossly in excess” price compared to other sellers’ goods and services
- When price gouging laws apply: Always
- Products or services the law applies to: All
- Lookback period for price comparisons: N/A
- Penalty: Contact the state for penalty information
Mississippi
Mississippi’s price gouging law includes the following:
- What is considered price gouging: Price increase
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: All products
- Lookback period for price comparisons: Before the state of emergency declaration
- Penalty: $1,000 – $5,000 (depending on the situation), confinement time, or both
Missouri
Missouri offers a consumer guide to price gouging, which outlines information such as:
- What is considered price gouging: “Large” increases in price
- When price gouging laws apply: After a disaster
- Products or services the law applies to: Necessities
- Lookback period for price comparisons: Before the disaster
- Penalty: Up to $1,000 per violation
New Jersey
New Jersey’s law against price gouging is included in the state’s Consumer Fraud Act:
- What is considered price gouging: More than 10% price increase
- When price gouging laws apply: During a declared state of emergency
- Products or services the law applies to: All
- Lookback period for price comparisons: Before the state of emergency declaration
- Penalty: $10,000 for the first offense and $20,000 for subsequent offenses
New York
New York’s Consumer Protection Law prohibits price gouging during an emergency:
- What is considered price gouging: 10% or more price increase
- When price gouging laws apply: During an emergency
- Products or services the law applies to: Necessities
- Lookback period for price comparisons: Before the emergency declaration
- Penalty: Up to $500 per product or service
North Carolina
North Carolina’s law against gouging is triggered during an emergency situation:
- What is considered price gouging: Excessive prices
- When price gouging laws apply: During an emergency, disaster, or market disruption
- Products or services the law applies to: Critical goods and services
- Lookback period for price comparisons: Before the emergency declaration
- Penalty: Up to $5,000 per violation and refunds
Oklahoma
Oklahoma’s statute against price gouging covers the following information:
- What is considered price gouging: More than 10% price increase
- When price gouging laws apply: During a declared emergency
- Products or services the law applies to: All
- Lookback period for price comparisons: Before the emergency declaration
- Penalty: $10,000 per violation
Oregon
Oregon’s price gouging law kicks in during an abnormal market disruption:
- What is considered price gouging: 15% or more price increase
- When price gouging laws apply: Abnormal market disruption declaration
- Products or services the law applies to: Essential goods and services
- Lookback period for price comparisons: Immediately before market disruption started
- Penalty: Contact the state for penalty information
Pennsylvania
Pennsylvania’s Price Gouging Act is triggered by a market disruption:
- What is considered price gouging: 20% or more price increase
- When price gouging laws apply: Market disruption (e.g., weather, emergencies, stockpile depletion, etc.)
- Products or services the law applies to: All
- Lookback period for price comparisons: Before the state of disaster emergency
- Penalty: Up to $10,000 per violation
Rhode Island
Price gouging is illegal in Rhode Island. The details include:
- What is considered price gouging: “Unconscionably high price”
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: Essential commodities
- Lookback period for price comparisons: Before the state of emergency declaration
- Penalty: Up to $1,000 per violation; maximum fine of $25,000 during a 24-hour period
South Carolina
South Carolina’s laws against price gouging prevent businesses from overcharging consumers. Here are the details:
- What is considered price gouging: “Much higher price”
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: All
- Lookback period for price comparisons: 30 days before state of emergency declaration
- Penalty: Up to $1,000, 30 days jail time, or both
Tennessee
Price gouging is illegal under a Tennessee statute, which outlines the following information:
- What is considered price gouging: “Grossly in excess” price compared to normal prices
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: Emergency supplies, medical supplies, and consumer food items
- Lookback period for price comparisons: Before the state of emergency declaration
- Penalty: Refunds and possible fines of $1,000 per violation
Texas
Here’s a look at Texas’ laws against price gouging:
- What is considered price gouging: Exorbitant or excessive price
- When price gouging laws apply: After a disaster declaration
- Products or services the law applies to: Necessities
- Lookback period for price comparisons: Before the declaration
- Penalty: Up to $10,000 per violation, plus $250,000 if the consumer is elderly
Utah
Utah’s law is known as “Price Controls During Emergencies Act.” Take a look at the following information relating to the state’s price gouging law:
- What is considered price gouging: More than 10% price increase
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: All
- Lookback period for price comparisons: 30 days before the emergency declaration
- Penalty: Up to $1,000 per violation; max $10,000 per day
Vermont
Take a look at the 411 for Vermont’s laws against price gouging:
- What is considered price gouging: Unconscionably high prices
- When price gouging laws apply: During a market emergency
- Products or services the law applies to: Petroleum and heating fuel products
- Lookback period for price comparisons: More than seven days before market emergency declaration
- Penalty: Contact the state for penalty information
Virginia
The Virginia Post-Disaster Anti-Price Gouging Act prevents businesses from engaging in price gouging:
- What is considered price gouging: “Unconscionable” prices
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: Necessary goods and services
- Lookback period for price comparisons: 10 days before the disaster
- Penalty: Check with the state for penalty information
West Virginia
Curious about West Virginia’s price gouging law? Here’s the rundown:
- What is considered price gouging: More than 10% price increase
- When price gouging laws apply: During a state of emergency or preparedness
- Products or services the law applies to: Good or service that’s necessary for health, safety and welfare
- Lookback period for price comparisons: 10 days before declaration
- Penalty: Up to $1,000 fine, one year jail time, or both
Wisconsin
Wisconsin’s ban against price gouging includes the following details:
- What is considered price gouging: More than 15% price increase
- When price gouging laws apply: During a state of emergency
- Products or services the law applies to: All
- Lookback period for price comparisons: 60 days before a declared emergency
- Penalty: Up to $10,000 fine
Reducing your business’s liability
If you’re concerned about customers feeling price gouged, there are a few things you can do to protect your business.
This probably goes without saying, but the only way to reduce your business’s liability is not to price gouge. Avoid charging customers exorbitant prices just because you can.
To protect your business from price gouging accusations, you must:
- Understand your state’s price gouging laws
- Keep business records detailing your costs and pricing history
- Come up with fair price increases that you can explain
- Analyze similar product or service pricing to ensure your prices are on par
To avoid price gouging, you need detailed business records. With Patriot’s online accounting software, you can securely manage receipts and documents all within your account. Get your free trial now!
This is not intended as legal advice; for more information, please click here.