Price gouging occurs when a business charges more for goods
or services than its regular selling price. Unethical, unscrupulous
businesses engage in price gouging during times of emergency,
such as the recent ice storms.
Act 376 of 1997 is a state law that was passed prohibiting
businesses from price gouging in the wake of a disaster or
state of emergency. The law is an amendment to the Arkansas
Deceptive Trade Practices Act, which is enforced by the Attorney
General and county prosecutors.
In short, the law prohibits businesses from charging more
than 10% above the pre-disaster price of the goods or services.
The scope of the law is very broad and is intended to cover
anything that may be needed in the event of a state of emergency.
Examples of items and services covered by the law include:
food, water, flashlights, batteries, blankets, plywood, nails,
hammers, medicine, bandages, lumber, and fuel.
The price gouging law is triggered whenever a state of emergency
is declared by the Governor or the President. It remains
in effect for at least 30 days and can be extended another
30 days by the local governing body if necessary to protect
the lives, property, or welfare of the citizens.
While the law sets a general 10% cap on prices during an
emergency, businesses may lawfully charge a higher price
if they can successfully establish that the higher price
is directly attributable to additional costs imposed by the
supplier or the result of additional costs for labor or materials
used to provide the goods or service. In such a limited situation,
the business may charge no more than 10% above the total
of the cost to the business plus the markup which would customarily
be applied by the business for that good or service in the
usual course of business immediately prior to the onset of
the state of emergency.
Act 376 has strong penalties for those who engage in price
gouging. A violation of Act 376 is a violation of the Deceptive
Trade Practices Act and can result in injunctive relief,
restitution to consumers, costs, attorneys’ fees, and
civil penalties up to $10,000 per violation. More important,
a violation of Act 376 is also a Class A misdemeanor, which
carries a penalty of one year in jail or a $1,000 fine, or
both.
Tips and Information
Before you agree to purchase goods or services,
try to do some comparison shopping. Avoid "drive-by" quotes
from door-to-door solicitors. When possible, deal with established,
reputable businesses in the community. Always get estimates
and price quotes in writing.
If you believe that a business may be engaging
in price gouging, contact the Attorney General's Office at
200 Tower Building 323 Center St., Little Rock, AR 72201.
Or call (501) 682-2341 or 1-800-482-8982 (voice or TDD). Contact Us
Consumer Protection Division
501-682-2341
800-482-8982 (statewide)
501-682-8118 (fax)
consumer@ag.state.ar.us
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