District Attorney Dan Dow today issued a consumer protection update regarding price-gouging laws following Governor Gavin Newsom’s April 4, 2020, Executive Order N-44-20. Mr. Dow also provided an update on enforcement measures taken by the District Attorney’s office.
Importantly, Governor Newsom’s Executive Order N-44-20 fills in a missing gap left in the existing price-gouging laws by regulating businesses that have recently started selling a covered good, such as hand sanitizers or face masks. This Order finds that a price is “unconscionably excessive” if a business marks up the price to the public by more than 50% of its cost.
Penal Code section 396 still applies to those businesses that were already selling these consumer goods. But Executive Order N-44-20 has adjusted the date from which the 10% price increase is measured. Under the new Order, businesses are prohibited from raising prices more than 10% of any item that it was previously selling on February 4, 2020, replacing the previous March 4, 2020 enforcement date. An exception to the rule is if a business can prove that its cost increased.
Covered goods and services include food, consumer goods, emergency supplies, medical supplies, building materials, gasoline, transportation, freight and storage services, hotel accommodations, and rental housing.
Businesses are encouraged to thoroughly review Executive Order N-44-20.
In addition District Attorney Dan Dow provided an update of the steps the District Attorney’s Office has undertaken to prevent price-gouging during the COVID-19 pandemic:
“Since Governor Newsom declared the State of Emergency on March 4, 2020, our office has made the prevention of price-gouging in San Luis Obispo County a top priority. We are receiving complaints from our citizens every day, and we are investigating each one. We have also issued press releases inviting citizens to contact us with complaints and have issued press releases warning businesses that our office will enforce these laws. These press releases have made a significant impact on social media sites, garnering dozens of comments and ‘shares.’ We are also having staff routinely visit businesses throughout the county in an effort to educate small business owners on these laws.
This month, we are finding facemasks and hand sanitizers the top new products for retail businesses. We expect complaints to rise soon as several local companies report they are expecting large shipments of facemasks from overseas at higher than standard costs. We are proactively sharing Executive Order N-44-20 with businesses to prevent any potential price gouging.
We anticipate positive responses from most businesses because that is what our office experienced last month. Most businesses in our county want to do the right thing and expressed frustration because of high supplier costs and the changing legal landscape.
Simply put, our office’s number one goal right now is to get the word out on the changes to the price-gouging laws to our business community. Should a business fail to comply after a Notice of Violation, we intend to proceed with prosecution aggressively.”
Price gouging is a misdemeanor punishable by up to one year in jail and a fine of up to $10,000. Violators may also be subject to civil enforcement actions and penalties up to $5,000 per violation, plus restitution.
County residents may report suspected price gouging by calling the District Attorney’s Office at (805) 781-5800 or by email to email@example.com.