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Monday, November 4, 2024

Attorney General Bonta advocates for federal ban on price gouging

State AG
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Attorney General Rob Bonta | Official website

California Attorney General Rob Bonta, alongside 16 other attorneys general, has called for a federal prohibition on price gouging. While 40 states, including California, have existing bans on this practice, there is currently no federal regulation in place. This lack of federal oversight poses challenges for states trying to protect consumers from inflated prices across nationwide supply chains.

Attorney General Bonta emphasized the importance of such legislation: “During and after a crisis, it is unfair — and harmful to our economy —for companies to reap higher profits for selling goods and services that families need to survive. That is why California’s price gouging law protects Californians during and after wildfires, severe weather storms, and other emergencies.”

Bonta argues that a federal law would complement state laws by facilitating enforcement at a national level. This could help shield both consumers and small businesses from unjust pricing practices further up the supply chain. He stated that "a federal price gouging prohibition that complements state law would build on successful partnerships between states and the federal government to protect consumers by making it easier to enforce price gouging prohibitions nationally."

Price gouging involves significant price hikes for essential goods during emergencies. Current prohibitions allow businesses to increase prices only enough to cover costs without inflating profit margins.

The letter sent by the attorneys general outlines how current gaps in federal regulations permit larger companies outside state jurisdiction to raise prices excessively. A federal prohibition would enable agencies like the Federal Trade Commission to address these issues throughout the supply chain.

The letter also highlights several benefits of price gouging laws, such as preventing inefficient pricing overreactions during crises, encouraging production of essential supplies, discouraging hoarding, and maintaining competitive prices.

Attorney General Bonta joined his counterparts from New York, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Oregon, New Jersey, New Mexico, Pennsylvania, Vermont, and the District of Columbia in this appeal.

In California specifically, Penal Code Section 396 makes price gouging illegal during a state of emergency. Residents who suspect they are victims of this practice are encouraged to report it locally or through the Attorney General's office website.

For more details on this issue or related FAQs from the Department of Justice (DOJ), interested parties can access additional resources online.

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