What is Price Gouging?
Price gouging laws were enacted in 2002 when legislators found that during emergencies and major disasters some merchants would take advantage of consumers and raise prices on goods.
Price Gouging is identified in the Law as “excessive price increases”. Excessive price increases are defined as a price that is considered excessive when compared to the price a good or service was being offered or sold before the state of emergency.
The Law recognizes two (2) types of excessive price increases:
- The price exceeds by more than ten percent (10%) the price at which the good or service was sold or offered for sale by the seller in the usual course of business immediately prior to the state of emergency, unless the price charged by the seller is attributable to additional costs imposed by the seller’s supplier or other costs of providing the good or service during the state of emergency;
- 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, the price represents an increase of more than ten percent (10%) in the amount of markup from cost, compared to the markup customarily applied by the seller in the usual course of business immediately prior to the state of emergency.
A “State of emergency” means a natural or man-made disaster or emergency for which a state of emergency has been declared by the President of the United States or the Governor, or for which a state of emergency has been declared by a municipal emergency management coordinator N.J.S.A. 56:8-108.
Who Enforces Price Gouging Laws in New Jersey?
The New Jersey Attorney General has the power to enforce price gouging laws in New Jersey. If it “appears” to the Attorney General that a person or entity has engaged in Price Gouging, Law Enforcement can:
- Require the accused to file a statement or report in writing, under oath, or otherwise, as to all the facts and circumstances concerning the sale or advertisement of merchandise and other data and information as they may deem necessary;
- Examine any person in connection with the sale or advertisement of any merchandise, under oath;
- Examine any merchandise or sample thereof, record, book, document, account or paper as they may deem necessary; and
- Pursuant to an order of the Superior Court impound any record, book, document, account, paper, or sample of merchandise that is produced in accordance with this act, and retain the same in their possession until the completion of all proceedings in connection with which the same are produced.
A person or entity that fails to comply with the investigation can be held in contempt of court or be banned from selling any merchandise. N.J.S.A. 56:8-6. The investigation can require that individuals produce documents and give statements even if they assert their Fifth Amendment Privilege. N.J.S.A. 56:8-7.
Price Gouging Statute
§ 56:8-3. Investigation by attorney general; powers and duties
When it shall appear to the Attorney General that a person has engaged in, is engaging in, or is about to engage in any practice declared to be unlawful by this act, or when he believes it to be in the public interest that an investigation should be made to ascertain whether a person in fact has engaged in, is engaging in or is about to engage in, any such practice, he may:
(a) Require such person to file on such forms as are prescribed a statement or report in writing under oath or otherwise, as to all the facts and circumstances concerning the sale or advertisement of merchandise by such person, and such other data and information as he may deem necessary;
(b) Examine under oath any person in connection with the sale or advertisement of any merchandise;
(c) Examine any merchandise or sample thereof, record, book, document, account or paper as he may deem necessary; and
(d) Pursuant to an order of the Superior Court impound any record, book, document, account, paper, or sample of merchandise that is produced in accordance with this act, and retain the same in his possession until the completion of all proceedings in connection with which the same are produced.
§ 56:8-6. Failure or refusal to file statement or report or obey subpoena issued by attorney general; punishment
If any person shall fail or refuse to file any statement or report, or obey any subpoena issued by the Attorney General, the Attorney General may apply to the Superior Court and obtain an order:
(a) Adjudging such person in contempt of court;
(b) Granting injunctive relief without notice restraining the sale or advertisement of any merchandise by such persons;
(c) Vacating, annulling, or suspending the corporate charter of a corporation created by or under the laws of this State or revoking or suspending the certificate of authority to do business in this State of a foreign corporation or revoking or suspending any other licenses, permits or certificates issued pursuant to law to such person which are used to further the allegedly unlawful practice; and
(d) Granting such other relief as may be required; until the person files the statement or report, or obeys the subpoena.
§ 56:8-7. Self-incrimination; exemption from prosecution or punishment
If any person shall refuse to testify or produce any book, paper or other document in any proceeding under this act for the reason that the testimony or evidence, documentary or otherwise, required of him may tend to incriminate him, convict him of a crime, or subject him to a penalty or forfeiture, and shall, notwithstanding, be directed to testify or to produce such book, paper or document, he shall comply with such direction.
A person who is entitled by law to, and does assert such privilege, and who complies with such direction shall not thereafter be prosecuted or subjected to any penalty or forfeiture in any criminal proceeding which arises out of and relates to the subject matter of the proceeding. No person so testifying shall be exempt from prosecution or punishment for perjury or false swearing committed by him in giving such testimony.
§ 56:8-8. Injunction against unlawful practices; appointment of receiver; additional penalties
Whenever it shall appear to the Attorney General that a person has engaged in, is engaging in or is about to engage in any practice declared to be unlawful by this act he may seek and obtain in a summary action in the Superior Court an injunction prohibiting such person from continuing such practices or engaging therein or doing any acts in furtherance thereof or an order appointing a receiver, or both.
In addition to any other remedy authorized herein the court may enjoin an individual from:
- Managing or owning any business organization within this State
- Serving as an officer, director, trustee, member of any executive board or similar governing body, principal, manager, stockholder owning 10% or more of the aggregate outstanding capital stock of all classes of any corporation doing business in this State
- Vacate or annul the charter of a corporation created by or under the laws of this State
- Revoke the certificate of authority to do business in this State of a foreign corporation
- Revoke any other licenses, permits or certificates issued pursuant to law to such person whenever such management, ownership, activity, charter authority license, permit or certificate have been or may be used to further such unlawful practice.
The court may make such orders or judgments as may be necessary to prevent the use or employment by a person of any prohibited practices, or which may be necessary to restore to any person in interest any moneys or property, real or personal which may have been acquired by means of any practice herein declared to be unlawful.
§ 56:8-107. Findings, declarations relative to excessive price increases at certain times
The Legislature finds and declares that during emergencies and major disasters, including, but not limited to, earthquakes, fires, floods or civil disturbances, some merchants have taken unfair advantage of consumers by greatly increasing prices for certain merchandise. While the pricing of merchandise is generally best left to the marketplace under ordinary conditions, when a declared state of emergency results in abnormal disruptions of the market, the public interest requires that excessive and unjustified price increases in the sale of certain merchandise be prohibited. It is the intention of the Legislature to prohibit excessive and unjustified price increases in the sale of certain merchandise during declared states of emergency in New Jersey.
§ 56:8-109. Unlawful practice to sell merchandise at excessive price during emergency.
It shall be an unlawful practice for any person to sell or offer to sell within 30 days after the declaration of a state of emergency, or for such other period of time as the Governor may specify in the declaration of a state of emergency, in the area for which the state of emergency has been declared, any merchandise which is consumed or used as a direct result of an emergency or which is consumed or used to preserve, protect, or sustain the life, health, safety or comfort of persons or their property for a price that constitutes an excessive price increase. The Governor may by executive order extend the period during which this prohibition remains in force.
§ 56:8-110. Gift certificate, card, validity, terms, required; definitions
- A gift certificate or gift card sold after the effective date of this amendatory act shall retain full unused value until presented in exchange for merchandise, or shall have any and all conditions and limitations, as permitted in paragraphs (1) through (3) of this subsection, disclosed to the purchaser of the gift certificate or gift card at the time of purchase as provided in subsection b. of this section.
(1) In no case shall the underlying funds associated with a gift certificate or gift card expire within the 24 months immediately following the date of sale.
(2) No dormancy fee shall be charged against a gift certificate or a gift card within the 24 months immediately following the date of sale, nor shall one be charged within the 24 months immediately following the most recent activity or transaction in which the certificate or card was used.
(3) A dormancy fee charged against a gift certificate or gift card as permitted by this subsection shall not exceed $2.00 per month.
- The terms of any expiration date or dormancy fee applicable to a gift certificate or gift card, as permitted by subsection a. of this section, shall be disclosed to a consumer by:
(1) written notice of the expiration date or dormancy fee or both printed in at least 10 point font, on the gift certificate or gift card, or the sales receipt for the certificate or card, or the package for the certificate or card; and
(2) written notice, in at least 10 point font, on the gift certificate or gift card, or the sales receipt for the certificate or card, or the package for the certificate or card, of a telephone number which the consumer may call, for information concerning any expiration date or dormancy fee.
- Beginning September 1, 2012 if a stored value card deemed a gift card or gift certificate pursuant to section 5 of P.L.2010, c.25 (C.46:30B-42.1) is redeemed and a balance of less than $5 remains on the card after redemption, at the owner’s request the merchant or other entity redeeming the card shall refund the balance in cash to the owner.
A merchant or other entity required to comply with the provisions of this subsection shall be liable to a penalty of $500 for each violation plus restitution of the amount of the cash value remaining on the stored value card, provided however that the amount of the penalty shall be trebled for an aggregate of 100 such violations occurring during any 12-month period.
Failure to provide requested cash redemption for each stored value card shall be considered a separate violation. Upon receiving evidence of any violation of the provisions of this subsection, the Director of the Division of Consumer Affairs, or the director’s designee, is empowered to hold hearings upon those violations and upon finding the violation to have been committed, to assess a penalty against the person alleged to have committed the violation in the amounts provided in this subsection. The director shall thereafter return to the owner of the card the amount of the cash value remaining on the card recovered under this subsection, and this shall be the sole remedy available to the owner for those violations.
This subsection does not impose on an issuer or merchant or other entity required to comply with the provisions of this subsection an obligation to advertise the availability of a refund balance redemption. Notwithstanding the foregoing or any provision in section 3 of P.L.1981, c.454 (C.56:12-16), an issuer, seller or redeemer of stored value cards may elect to include a disclosure or may, in the alternative, include a statement on the stored value card or other marketing materials that the card “is not redeemable for cash except as required by law” or similar statement.
This subsection shall not apply to:
(1) a non-reloadable stored value card with an initial value of $5 or less;
(2) a stored value card that is not purchased but is provided in lieu of a refund for returned merchandise;
(3) a stored value card that can be redeemed at multiple merchants that are not under common ownership or control, including but not limited to network-branded stored value cards;
(4) a rewards card;
(5) a stored value card that is donated or sold below face value to a nonprofit or charitable organization or an educational organization;
(6) a stored value card that is redeemable for admission to events or venues at a particular location or group of affiliated locations, or for goods or services in conjunction with admission to those events or venues, or both, at the event or venue or at specific locations affiliated with and in geographic proximity to the event or venue.
- Dormancy fee – charge imposed against the unused value of a gift card or gift certificate due to inactivity;
- Gift card – tangible device, whereon is embedded or encoded in an electronic or other format a value issued in exchange for payment, which promises to provide to the bearer merchandise of equal value to the remaining balance of the device. “Gift card” does not include a prepaid telecommunications or technology card, prepaid bank card or rewards card;
- Gift certificate – a written promise given in exchange for payment to provide merchandise in a specified amount or of equal value to the bearer of the certificate. “Gift certificate” does not include a prepaid telecommunications or technology card, prepaid bank card or rewards card;
- Merchandise – means and includes any objects, wares, goods, commodities, services or anything offered, directly or indirectly, to the public for sale;
- Prepaid bank card – a general use, prepaid card or other electronic payment device that is issued by a bank or other financial institution, or a licensed money transmitter, in a pre-denominated amount usable at multiple, unaffiliated merchants or at automated teller machines, or both, but shall not include a card issued by a retail merchant;
- Prepaid telecommunications or technology card – includes, but is not limited to: a prepaid telephone calling card; prepaid technical support card; or prepaid Internet disk distributed to or purchased by a consumer; and
- Rewards card – a card or certificate distributed by the issuer to a consumer pursuant to an awards, loyalty, rewards or promotional program, without any money or other consideration or thing of value by the consumer in exchange for the card or certificate.
What Should I Do if I Am Accused of Price Gouging?
If you are a business owner and received a letter from the Attorney General demanding records or information contact an attorney. You should not assume merchandise price increases are a violation of the Statute. A detailed analysis is necessary to determine your rights and whether or not there is a violation of the statue.
Daniel M. Rosenberg & Associates has aggressive defense attorneys who provide diligent and compassionate representation. Our team consists of former prosecutors and experienced attorneys who can help you navigate complex Price Gouging accusations to ensure that your business is protected from often unfair allegations of illegal conduct. Contact Rosenberg | Perry & Associates through our website or call (609) 216-7400.
New Jersey Consumer Affairs:
New Jersey Attorney General Statement: