Bill creates enhanced penalties for price gouging on necessities during an emergency
OLYMPIA — The Washington state Senate today passed Attorney General Bob Ferguson’s bill to prohibit price gouging in Washington during an emergency by a 29-20 vote. The bill now heads to the state House of Representatives for consideration.
If signed into law, those who engage in predatory price gouging would face a penalty of $25,000 per violation for violations of Washington’s Consumer Protection Act. The bill, sponsored by Sen. Jeannie Darneille, D-Tacoma, prohibits price gouging during an emergency on critical necessities like health care services, medical supplies, rental housing, motel rooms, gasoline and emergency supplies, such as water, batteries, soap and toiletries.
While the COVID-19 pandemic has been an enduring state of emergency, the new law will protect consumers during other states of emergency like earthquakes, landslides or forest fires.
Unlike a vast majority of states, Washington does not have a state law expressly prohibiting price gouging during an emergency. Thirty-six states and the District of Columbia have laws that prohibit price gouging during a state of emergency. Currently, the Attorney General’s Office uses the Consumer Protection Act’s general prohibition against unfair and deceptive business practices to combat price gouging, but courts have not defined what level of price increase constitutes as “unfair and deceptive.”
Since March 1, 2020, assistant attorneys general and investigators in the Attorney General’s Office responded to 1,366 price gouging complaints.
Ferguson’s original bill prohibited price increases of more than 10 percent in addition to the costs businesses incur during an emergency. In other words, the allowable price increase is all profit. A Senate committee amended the bill to increase the threshold to 15 percent. Sen. Mike Padden, R-Spokane Valley, offered an amendment today on the Senate floor to increase that percentage further upward to 25 percent. The amendment was inconsistent with what other states, including neighboring Oregon, have adopted and would have made Washington an outlier among those localities that have a price gouging law. The Senate did not adopt the amendment. Sen. Padden was the only Senate Republican to support the bill on final passage.
Oregon’s price gouging law has set its “unconscionably excessive” price gouging threshold at 15 percent.
“Price gouging impairs Washingtonians’ access to necessary goods and services during an emergency,” Ferguson said. “I appreciate the state senators who stepped up to block predatory price gouging and unconscionable price increases on emergency items. That said, it’s disappointing that so many state senators wanted to allow businesses to dial up their profits on emergency goods and services on the backs of Washingtonians impacted by forest fires, pandemics and landslides.”
“When the pandemic started and prices for PPE, hand sanitizer and other essential goods skyrocketed, I was shocked to learn that Washington does not have a law prohibiting price gouging during emergencies,” said Sen. Darneille. “I saw that seniors and others with limited resources were disproportionately affected by predatory pricing, putting their health and their lives at risk. That’s why I partnered with the attorney general to make sure this never happens again.”
Ferguson saw the need for a specific law on price gouging after more than 1,300 Washingtonians filed complaints with the office following the declaration of a public health emergency in spring 2020. Washingtonians complained about extreme price increases for facemasks, hand sanitizer and other products necessary to prevent the spread of COVID-19. For example, some Washingtonians reported paying $40 for an 8-ounce bottle of hand sanitizer that had recently cost $3.50, or $42 for facemasks that used to cost $8.
Investigators in the Attorney General’s Office followed up on leads by visiting hundreds of businesses all over the state. The office sent nine warning and 14 cease-and-desist letters to price gouging businesses.
These predatory prices disproportionately affected seniors and low-income Washingtonians, as well as the businesses and organizations that support them, such as home health care agencies and adult family homes. While there were dramatic price increases, even small increases still have a disparate effect on people who live on fixed incomes and struggle during states of emergency. Ferguson intended for the law to protect people who live on such fixed incomes — like Social Security — and have difficulty managing finances when prices increase above their planned cost of living expenses.
The new law will:
- Provide a clear and unambiguous definition of price gouging.
- Include a list of products, goods and services to apply in different kinds of emergencies consistent with price gouging statutes in other states.
- Allow businesses to recover costs incurred through external factors, such as supply chain or transport costs.
- Get automatically triggered when the governor declares a state of emergency.
- Establish civil penalties for violations of cease and desist orders, and non-compliance with the statute.
The Office of the Attorney General is the chief legal office for the state of Washington with attorneys and staff in 27 divisions across the state providing legal services to roughly 200 state agencies, boards and commissions. Visit www.atg.wa.gov to learn more.
Brionna Aho, Communications Director, (360) 753-2727; Brionna.firstname.lastname@example.org
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