Congress Considers Federal Price Gouging Legislation

As state Attorneys General and other government regulatory agencies ramp-up efforts to battle price-gouging during the COVID-19 pandemic, the House and Senate are now contemplating various proposals to address the problem during any declared state of emergency.

The first is H.R. 6264. Sponsored by Rep. Jason Smith, the proposed bill tasks the Secretary of Health and Human Services with identifying products and services that sell at an “unconscionably excessive price.” Violations include monetary fines or imprisonment.

The second is S. 3574. Sponsored by Sen. Thom Tillis, the proposed legislation is significantly harsher the H.R. 6264. It tasks Federal Trade Commission (FTC) attorneys and Attorney General with the enforcement of civil penalties of up to 10xs the amount of profits for goods and services that “grossly exceed” the average price, as well as criminal penalties up to $500M.

The third is H.R. 6450. Sponsored by Rep. Joe Neguse (and co-sponsored by Rep. Ted Lieu), the proposed bill is modeled after California Penal Code Section 396 and tasks the FTC with enforcement. It prohibits raising the price of certain consumer goods and services by more than 10% following a declaration of emergency.

Query whether one of these bills will be fast-tracked. A prime candidate might include H.R. 6472, the “COVID-19 Price Gouging Prevention Act.” It is sponsored by Rep. Jan Schakowsky and co-sponsored by five other Democrats.

The FTC is tasked with enforcement of the Act, which includes, without limitation, restrictions limited to the duration of the public health emergency related to COVID-19 (and any renewal of the emergency declaration), and prohibits prices for goods or services that are “unconscionably excessive” and “indicates the seller is using the circumstances related to such public health emergency to increase prices unreasonably” based on recent price history. Notably, the bill dos not define “unconscionably excessive” or “unreasonable” with any particularity. State Attorneys General are also provided with additional methods to initiate enforcement proceedings.

Consumer-facing businesses and others in the supply chain should consider consulting with an experienced FTC defense lawyer to avoid liability for charging unlawful prices for goods and services necessary for the health, safety and welfare of consumers.

Richard B. Newman is an FTC defense attorney at Hinch Newman LLP. Follow him on Twitter @FTC defense lawyer and on Facebook at @FTC defense attorney.

Informational purposes only. Not legal advice. May be considered attorney advertising.

 

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