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Emergency price gouging – California Penal Code PC 396

Posted by Raoul Severo | Nov 01, 2020 | 0 Comments

Price gouging is the act of significantly increasing the prices of goods, services, or commodities beyond reasonable rates. It happens when the ratio of supply and demands are unequal, either there is too much of the other. Though seemingly unfair, this is understandable due to how markets work. But there are times when providers intentionally gouge out prices during a state of emergency. To avoid this immoral act, California enacted PC 396.a

PC 396

The Legislature hereby finds that during a state of emergency or local emergency, including, but not limited to, an earthquake, flood, fire, riot, storm, drought, plant or animal infestation or disease, or other natural or manmade disaster, some merchants have taken unfair advantage of consumers by greatly increasing prices for essential consumer goods and services. While the pricing of consumer goods and services is generally best left to the marketplace under ordinary conditions, when a declared state of emergency or local emergency results in abnormal disruptions of the market, the public interest requires that excessive and unjustified increases in the prices of essential consumer goods and services be prohibited. It is the intent of the Legislature in enacting this act to protect citizens from excessive and unjustified increases in the prices charged during or shortly after a declared state of emergency or local emergency for goods and services that are vital and necessary for the health, safety, and welfare of consumers. Further, it is the intent of the Legislature that this section be liberally construed so that its beneficial purposes may be served.

Upon the proclamation of a state of emergency declared by the President of the United States or the Governor, or upon the declaration of a local emergency by an official, board, or other governing body vested with authority to make such a declaration in any county, city, or city and county, and for a period of 30 days following that proclamation or declaration, it is unlawful for a person, contractor, business, or other entity to sell or offer to sell any consumer food items or goods, goods or services used for emergency cleanup, emergency supplies, medical supplies, home heating oil, building materials, housing, transportation, freight, and storage services, or gasoline or other motor fuels for a price of more than 10 percent above the price charged by that person for those goods or services immediately prior to the proclamation or declaration of emergency. However, a greater price increase is not unlawful if that person can prove that the increase in price was directly attributable to additional costs imposed on it by the supplier of the goods, or directly attributable to additional costs for labor or materials used to provide the services, provided that in those situations where the increase in price is attributable to additional costs imposed by the seller's supplier or additional costs of providing the good or service during the state of emergency or local emergency, the price represents no more than 10 percent above the total of the cost to the seller plus the markup customarily applied by the seller for that good or service in the usual course of business immediately prior to the onset of the state of emergency or local emergency.

State of Emergency

Refers to any natural or manmade emergency resulting from an earthquake, flood, fire, riot, storm, drought, plant or animal infestation or disease, or other natural or manmade disaster for which a state of emergency has been declared by the President of the United States or the Governor of California.

Local Emergency

Refers to any of the aforementioned conditions (see state of emergency) declared by an official, board, or other governing body vested with authority to make such a declaration in any county, city, or city and county in California.

Consumer Food Items

This includes anything used for human or animal consumptions like:

  • foods,
  • drinks,
  • condiments, or
  • confections.

Repairs or Construction Services

This includes any services performed by any person who is required to be licensed under the Contractors' State License Law for repairs to residential or commercial property of any type that is damaged as a result of a disaster.

Emergency Supplies

Examples of emergency supplies are:

  • water,
  • flashlights,
  • radios,
  • batteries,
  • candles,
  • blankets,
  • soaps,
  • diapers,
  • temporary shelters,
  • tape,
  • toiletries,
  • woods,
  • nails, and
  • hammers.

Punishments for price gouging during a state of emergency

A violation of this section shall constitute an unlawful business practice and an act of unfair competition within the meaning of Section 17200 of the Business and Professions Code. The remedies and penalties provided by this section are cumulative to each other, the remedies under Section 17200 of the Business and Professions Code, and the remedies or penalties available under all other laws of this state.

Criminal punishment includes:

  • imprisonment in a county jail for a period not exceeding one year,
  • or by a fine of not more than ten thousand dollars ($10,000),
  • or by both that fine and imprisonment.

Legal support

Price gouging during a state of emergency is a serious criminal accusation. When facing said charges under PC 396, it would be the defendant's best interest to seek the aid of our top-tier California defense lawyers. They have significant levels of experiences to be able to settle such legal disputes. Employing them would raise the chances of settling the charges if not getting them dismissed!

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