Colorado Merchants Have Pricing Freedom

Flooding in Colorado has caused damage across nearly 2,000 square miles of the state. While many businesses are chipping in to help people affected, some people are concerned that lack of a state anti-price gouging law leaves consumers exposed to unjust price increases.

A Denver Post story begins:

Flood-ravaged Colorado is one of only 15 states where price-gouging during an emergency is not illegal — it’s merely capitalism.

To some it might be socially reprehensible and ethically wrong, but legally there’s nothing to prevent a businessperson from upping the cost of necessary post-disaster supplies to meet the pressing needs of those affected by the event.

“The price of a product or service alone is not a scam if it’s fully disclosed,” Colorado Assistant Attorney General Jan Zavislan said. “If the consumer has the information and has the right to shop around, but the sources in an emergency aren’t there, it might be an outrage to people, but there’s no specific law on the price itself.”

As communities begin the process of cleaning up from the floods and taking an inventory of insurance coverage — if any — more immediate needs of food, water, fuel and shelter can be met with surprise over their cost.

As long as a merchant is clear on the price — even if it’s 10 times the rate it had been before the disaster — then there’s no law broken.

The article doesn’t actually cite examples of price gouging in Colorado, just notes that nothing in state law would prevent it. (Another story online said a Longmont, CO resident reported that a septic company nearly doubled it rates after the flood, but that’s it so far as I can find.)

The article explains that a bill to prohibit price gouging in Colorado was vetoed in 2006 by then-Gov. Bill Owens. Owens said, “[the bill] violates the fundamental principles of our market-based economy.”

NOTES: The Denver Post article states Colorado does have an anti-price gouging law solely for needed drugs, the price of which cannot rise more than 10 percent during a disaster declaration.

By the way, by my count 34 states have anti-price gouging laws and 16 states do not have such laws (see my list and the related graphic). The article claims 35 states with and 15 without. Maybe I need to update my list.

2 thoughts on “Colorado Merchants Have Pricing Freedom

  1. What I’d love to see – and never expect to see, outside of maybe Cato or Reason – is an examination of shortages in Colorado vs. other disasters.

    Economics predicts a relative lack of them, after all.

  2. Both Iowa and Colorado have recently experienced flooding. Iowa has an anti-price gouging law and Colorado does not. A comparison could be made (despite the myriad differences between the two events).

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