Most states have laws to curb price gouging, many of them tied to declared states of emergency.
As Hurricane Milton neared landfall in western Florida on Wednesday, the Biden administration issued a warning to consumers and businesses about the increased risk of fraud, price gouging, and illegal collusion following major natural disasters. U.S. Attorney Ronald C. Gathe Jr. for the Middle District of Louisiana emphasized that “wrongdoers are looking to exploit opportunities and victims of natural disasters for their own personal gain.”
Federal Trade Commission (FTC) chair Lina Khan also voiced concerns over reports of price gouging for essential goods, including hotels, groceries, and gasoline. With many areas facing gas shortages, Patrick De Haan, an oil and gas analyst, reported that by noon ET on Wednesday, nearly a quarter of gas stations in Florida had run out of fuel.
In response, Manish Kumar, deputy assistant attorney general in the Justice Department’s Antitrust Division, warned businesses to refrain from using the hurricane as an excuse to exploit consumers with inflated prices. “Companies are on notice: do not use the hurricane as an excuse to exploit people through illegal behavior,” Kumar stated.
To counter these actions, most states have laws in place to prevent price gouging, which are typically activated once a state of emergency is declared. These laws aim to prevent the unjustifiable hike of prices on essential goods and services during a crisis. Several retailers and airlines, aware of the public scrutiny, have already announced that they will freeze their prices in anticipation of the storm’s impact.
Retail giant Home Depot confirmed that it had implemented a freeze on its prices ahead of the storm. “Once we have any emergency situation, all of our prices are freeze,” Kelly Mayhall, president of Home Depot’s Southern division, told CNBC on Wednesday. Other businesses, particularly those in the hospitality and travel sectors, were also preparing to prevent price manipulation.
The Justice Department and FTC’s warning underscores the need for consumers to remain vigilant during emergencies, ensuring that they are not taken advantage of during times of crisis. As Hurricane Milton made its way toward Florida, officials continued to monitor the situation, prepared to take action against any business found violating price gouging laws.
