NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A10270
TITLE OF BILL:
An act to amend the general business law, in relation to price gouging
This legislation would update New York's statute regarding the price
gouging of consumer goods by expanding it to cover essential medical
supplies and services and other goods or services used to promote the
health or welfare of the public.
SUMMARY OF PROVISIONS:
Section 1 of the bill amends Section 396-r of the general business law
to broaden the application of New York's price gouging statute by apply-
ing it to goods and services vital and necessary for the health, safety
and welfare of consumers or the general public, rather than simply to
consumer goods and services.
Section 1 also broadens the definition of "goods and services" to
include essential medical supplies and services used for the care, cure,
mitigation, treatment or prevention of any illness or disease, and any
other goods and services used to promote the health or general welfare
of the public. The term used under current statute is "consumer goods
and services," and is limited to goods and services used, bought, or
rendered primarily for personal, family or household purposes.
Section 1 also adds language allowing a defendant to rebut a prima facie
case with evidence that the increase in the amount charged preserves the
margin of profit that the defendant received for the same goods or
services prior to the abnormal disruption of the market.
Section 1 also allows a court to impose a civil penalty for violations
of Section 396-r of up to $25,000 per violation, or three times the
gross receipts for the relevant goods or services, whichever is greater,
which would increase allowable penalties for egregious instances of
Finally, Section 1 allows the Attorney General to promulgate rules and
regulations to effectuate and enforce the provisions of Section 396-r.
Section 2 provides the effective date.
New York's current price gouging statute, which prohibits selling or
offering for sale consumer goods or services at an "unconscionably
excessive price" during an abnormal disruption of the market, is limited
in its application to goods or services "vital and necessary for the
health, safety, and welfare of consumers."
During the COVED-19 pandemic, we have seen countless instances of egre-
gious price gouging, particularly of medical supplies such as hand sani-
tizer, face masks, bandages, medical-grade apparel, and other crucial
medical supplies that are desperately needed by our hospitals and other
health care facilities.
These examples have illustrated ways to strengthen our existing price
gouging statute, namely by broadening its application to, any goods and
services vital for the health, safety, and welfare of the general
public, specifically applying it to medical supplies and services used
to treat, cure, or prevent disease or illness, and authorizing the
Attorney General to pursue increased penalties against those trying to
profit off of others' misfortune.
This legislation would be a strong deterrent to individuals seeking to
use a pandemic or other emergency to enrich themselves at the expense of
the general public and the health care workers who are fighting to keep
us safe, at great personal danger to themselves.
This is a new bill in the Assembly.
None to the state.
This act shall take effect immediately.
STATE OF NEW YORK
April 8, 2020
Introduced by M. of A. ROZIC -- read once and referred to the Committee
on Consumer Affairs and Protection
AN ACT to amend the general business law, in relation to price gouging
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 396-r of the general business law, as amended by
2 chapter 510 of the laws of 1998, subdivision 4 as amended by chapter 224
3 of the laws of 2008, is amended to read as follows:
4 § 396-r. Price gouging. 1. Legislative findings and declaration. The
5 legislature hereby finds that during periods of abnormal disruption of
6 the market caused by strikes, power failures, severe shortages or other
7 extraordinary adverse circumstances, some parties within the chain of
8 distribution of [consumer] goods have taken unfair advantage of [consum-
9 ers] the public by charging grossly excessive prices for essential
10 [consumer] goods and services.
11 In order to prevent any party within the chain of distribution of any
12 [consumer] goods from taking unfair advantage of [consumers] the public
13 during abnormal disruptions of the market, the legislature declares that
14 the public interest requires that such conduct be prohibited and made
15 subject to civil penalties.
16 2. During any abnormal disruption of the market for [consumer] goods
17 and services vital and necessary for the health, safety and welfare of
18 consumers or the general public, no party within the chain of distrib-
19 ution of such [consumer] goods or services or both shall sell or offer
20 to sell any such goods or services or both for an amount which repres-
21 ents an unconscionably excessive price. For purposes of this section,
22 the phrase "abnormal disruption of the market" shall mean any change in
23 the market, whether actual or imminently threatened, resulting from
24 stress of weather, convulsion of nature, failure or shortage of electric
25 power or other source of energy, strike, civil disorder, war, military
26 action, national or local emergency, or other cause of an abnormal
27 disruption of the market which results in the declaration of a state of
28 emergency by the governor. For the purposes of this section, the term
29 [consumer] goods and services shall [mean those] include (a) consumer
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
 is old law to be omitted.
A. 10270 2
1 goods and services used, bought or rendered primarily for personal,
2 family or household purposes, (b) essential medical supplies and
3 services used for the care, cure, mitigation, treatment or prevention of
4 any illness or disease, and (c) any other essential goods and services
5 used to promote the health or welfare of the public. This prohibition
6 shall apply to all parties within the chain of distribution, including
7 any manufacturer, supplier, wholesaler, distributor or retail seller of
8 [consumer] goods or services or both sold by one party to another when
9 the product sold was located in the state prior to the sale. [Consumer
10 goods] Goods and services shall also include any repairs made by any
11 party within the chain of distribution of [consumer] goods on an emer-
12 gency basis as a result of such abnormal disruption of the market.
13 3. Whether a price is unconscionably excessive is a question of law
14 for the court.
15 (a) The court's determination that a violation of this section has
16 occurred shall be based on any of the following factors: (i) that the
17 amount of the excess in price is unconscionably extreme; or (ii) that
18 there was an exercise of unfair leverage or unconscionable means; or
19 (iii) a combination of both factors in subparagraphs (i) and (ii) of
20 this paragraph.
21 (b) In any proceeding commenced pursuant to subdivision four of this
22 section, prima facie proof that a violation of this section has occurred
23 shall include evidence that:
24 (i) the amount charged represents a gross disparity between the price
25 of the goods or services which were the subject of the transaction and
26 their value measured by the price at which such [consumer] goods or
27 services were sold or offered for sale by the defendant in the usual
28 course of business immediately prior to the onset of the abnormal
29 disruption of the market; or
30 (ii) the amount charged grossly exceeded the price at which the same
31 or similar goods or services were readily obtainable [by other consum-
32 ers] in the trade area.
33 (c) A defendant may rebut a prima facie case with evidence that (1)
34 the increase in the amount charged preserves the margin of profit that
35 the defendant received for the same goods or services prior to the
36 abnormal disruption of the market or (2) additional costs not within the
37 control of the defendant were imposed on the defendant for the goods or
39 4. Where a violation of this section is alleged to have occurred, the
40 attorney general may apply in the name of the People of the State of New
41 York to the supreme court of the State of New York within the judicial
42 district in which such violations are alleged to have occurred, on
43 notice of five days, for an order enjoining or restraining commission or
44 continuance of the alleged unlawful acts. In any such proceeding, the
45 court shall impose a civil penalty in an amount not to exceed twenty-
46 five thousand dollars per violation or three times the gross receipts
47 for the relevant goods or services, whichever is greater and, where
48 appropriate, order restitution to aggrieved [consumers] parties.
49 5. The attorney general may promulgate such rules and regulations as
50 are necessary to effectuate and enforce the provisions of this section.
51 § 2. This act shall take effect immediately.