Written by Tyler Sankes
As Hurricane Florence continues its path along the eastern United States, a temporary law is in effect in North Carolina that aims to clean up the hurricane’s destruction. Although the statute cannot remove debris or fix powerlines, it has succeeded in affording hundreds of consumers an avenue to voice their concerns in a time of need.
The law, North Carolina General Statutes Chapter 75 Article 38, prohibits producers of goods and services to charge unreasonably excessive prices and requires violators to refund the consumer and pay up to $5,000 per violation. But before your inner curiosity questions the generality of the statute and/or its market interventionist nature, there are constraints and language that act as guideposts to insure the law is used as intended.
The statue can only be in effect for 45 days from the triggering event and cannot continue beyond the threshold unless renewed by the Governor. In North Carolina, the triggering event was not Florence’s landfall, but rather occurred when the state declared a State of Emergency on September 7th, 2018. Therefore, the law is currently projected to be in place until at least October 22, 2018.
An event must take place that causes the statute to come into effect. In addition, the event is only ‘triggering’ when North Carolina declares a State of Emergency or when it causes a significant market disruption. Market disruptions, whether actual or imminent, are considered significant when goods or services that are needed by consumers as a direct result of an emergency or are used to protect one’s self or property. Some examples include natural disasters, strikes, civil disorders, war, and terrorist attacks.
The characteristic and price of the good or service, by itself, cannot show that the price gouging law was violated; consumers are required to show intent. Not only must the goods be consumed as a direct result of the emergency, but the producer must possess knowledge and intent to charge unreasonably excessive prices.
To help determine if a producer is charging excessive prices, the law provides several characteristics that should be considered. Increases in supply cost, price compared to previous sales or local competition, greater macroeconomic forces (such as inflation or interest rates), and increased business risks are factors that may be analyzed to help determine whether a price is excessive.
Results So Far
Over 500 complaints have been received by Attorney General Josh Stein’s office. Although these are only complaints and have not been proven in a court of law, the resounding response by North Carolina citizens show that there is a need and the law is responding.
Christina Maxouris, There have been more than 500 reports of price gouging in North Carolina after Florence, CNN (Sep. 17, 2018).
N.C. Gen. Stat. § 75-38
Photo courtesy of AP Photo.