New York newspaper says “add shame to penalty for gouging”

Michael Giberson

Is price gouging like highway robbery? The Journal News, from the suburbs north of New York City, said: “Add shame to penalty for gouging“:

Given the extraordinary cost of just about everything in New York, it is often difficult to distinguish price-gouging, which is both illegal and despicable, from the usual highway robbery, which is just sort of expected. Then there are those merchants, as seen during Superstorm Sandy, who make the distinction so abundantly clear that all doubt is removed. Stiff fines and restitution should await these offenders, should the allegations hold up; a measure of public shaming ought to be part of the menu of sanctions as well.

Attorney General Eric Schneiderman, following up on familiar pre-storm threats and warnings, announced enforcement actions Thursday against a dozen gas station operators who allegedly kicked motorists when they were down — after rampaging Sandy darkened many gasoline stations, disrupted gasoline supplies and caused consumers, many toting gasoline cans, to endure interminable waits outside stations. Long lines and even rationing weren’t all that they faced.

For example, there were Mobil stations in Katonah, at 80 Bedford Road, and in Spring Valley, at 189 Route 59, where gasoline sold for $4.79 and $4.65, respectively, according to the allegations from the AG’s Office. Those prices — like all the charges highlighted by Schneiderman — were for a gallon of regular, and decidedly higher than normal, even in this high-cost region.

There was the BP station in Elmont where the price was an attention-getting $6.99; prices at the Shell in East Elmhurst, according to complaints, ranged from $4.89 to $7.90.

But they had nothing on the purported gouging leader, the Mobil at 3424 East Tremont Avenue in the Bronx, “where a consumer waiting in line for over an hour was just three cars from the pump when she was told that she would be charged $50 for five gallons of gasoline — $10 per gallon.” Stations nearby charged $3.95.

If I may interject, I think it is useful to distinguish between cases of suddenly higher prices and cases in which stations charge higher than the publicly posted price.

The “Stations nearby charged $3.95″ will be an incomplete accounting of the cost, since they must have had lines too. It would be great if the New York Attorney General’s office collected data on time spent in lines, might be useful in helping to calculate the full cost of low station prices.

I’m interested in, among other things, anti-price gouging rhetoric and moral arguments concerning price increases, so I’m collecting the rest of the editorial here for future academic study:

New York’s Price Gouging Law bars merchants from taking unfair advantage of consumers by selling goods and services for an “unconscionably excessive price” during an “abnormal disruption of the market”; “unconscionably excessive” is not set forth in detail, but when the charged amount represents a “gross disparity” with the price just before the emergency, state investigators get their backs up. New Jersey’s law is more precise, barring increases of more than 10 percent in an emergency; the New Jersey law makes an exception for merchants who face increased costs, but the markup is still limited to 10 percent above normal.

New York’s law covers more than gasoline; it also applies to supermarkets, hardware stores, bodegas, delis, and taxi and livery cabs — all of which generated consumer complaints post-Sandy. “We are actively investigating the hundreds of complaints we’ve received from consumers of businesses preying on victims of Hurricane Sandy,” said Schneiderman. “There must be no tolerance for unscrupulous individuals who take advantage of New Yorkers trying to rebuild their lives.”

Violators in New York face fines of up to $25,000, plus restitution — evidently not stiff enough to compel exacting compliance. Earlier, Schneiderman’s office announced that it sent enforcement letters to 13 gas station operators, bringing the prevailing total to 25.

During Sandy, there also were media reports of consumers being gouged for batteries ($7 for a two-pack of AA batteries); matches ($10 a box, three times the normal cost); and groceries ($7 for a loaf of bread).

The very same complaints followed Irene, last year’s “storm of the century,” suggesting that existing sanctions simply aren’t robust enough — worrisome in light of predictions that storm emergencies will become even more frequent in this age of rising sea levels and planet-warming. Albany would do well to consider whether an additional sanction might help gain the attention of merchants: requiring adjudicated price-gougers to announce their distinction in a prominent way — perhaps in large signs displayed on their premises, say for periods of 30 to 60 days, longer for repeat offenders.

Shame might well prove a worthy deterrent where the threat of fines and restitution, for too many, now elicit little more than yawns.

Ah yes, let’s make the merchants wear a scarlet “PG” around their neck, that’ll teach ‘em some manners. And for the consumers who apparently made the purchases on purpose, then later regretted them and called the state, let’s tattoo on their forehead the words “Poor Impulse Control.”

After all, it take two to tango: if the consumers didn’t buy at the high prices, merchants couldn’t charge them.

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2 thoughts on “New York newspaper says “add shame to penalty for gouging”

  1. So the next time there’s a storm every business that expects operating costs to rise because of it (that’s all of them) will simply shut down for the duration, rather than either run at a loss or be bullied by the government.

  2. Pingback: Economics research topics in price gouging from odd-even rationing to guilt and shame | Knowledge Problem

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