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Senator Tom Umberg (Photo: Kevin Sanders for California Globe)

New Bill Would Aim to Stop Price Gouging During State Emergencies

SB 1196 would give misdemeanors to those who raise prices 10% or above for over 30 days

By Evan Symon, April 9, 2020 2:16 pm

On Wednesday, a new bill that targets price gougers during states of emergency was announced.

Expanded misdemeanors for price gougers

Under Senate Bill 1196, authored by Senator Thomas J. Umberg (D-Santa Ana), consumer protections against price gougers would be expanded. Whereas under the old law it only covered established sellers with a loophole existing for newer sellers to avoid punishment, such as internet sellers or newer sellers who buy a desired or wanted product, stockpile it, then sell it during an emergency for a high mark-up.

Senator Thomas J. Umberg (Photo: Kevin Sanders for California Globe)

SB 1196 would give gougers who, for 30 or more days, had sold something for a 10% or greater price than what it had been selling for 3 months prior. Those found guilty would receive a misdemeanor.

With many reports of people stocking up on wanted COVID-19 coronavirus pandemic emergency items such as toilet paper and hand sanitizer to sell at greatly inflated prices, as well as more established businesses charging significantly more during the emergency, SB 1196 has drawn a lot of attention.

Support for SB 1196

Orange County District Attorney Todd Spitzer. (Wikipedia)

Supporters including lawmakers, consumer protection groups, and district attorneys say that this is a needed protection for people during states of emergency.

“We are committed to protect Californians from those that prey on our community during the trying times of national or global emergencies. We will continue to use all of the tools at our disposal to prevent price gouging during this, and any future disaster,” Senator Umberg said in a press release. “There are brave men and women in the health and public safety sectors of our community whose lives are on the line every day. It is immoral and unacceptable to allow some to take advantage of this crisis when so many are fighting to help.”

Also noting support in a press release was Orange County District Attorney Todd Spitzer.

“Exploiting the public’s fear and panic is not a defense to engaging in criminal activity,” explained DA Spitzer. “Existing law left a loophole that allowed opportunists to take advantage of a crisis and overcharge customers for a product just because they had never sold that product before. This important legislation closes that loophole and ensures that those who shamelessly exploit people’s vulnerabilities during a time of emergency are prosecuted. In this case we do not reward ‘entrepreneurship.'”

Opposition to the bill

While the bill has drawn much support, there has been some opposition to it. While no lawmakers have given formal opposition to the bill bill so far, a growing number of business owners have been coming out against it.  Some have noted that it goes against free market selling.

“It is true that during a major emergency, like the pandemic, that selling something needed for more is wrong. Especially things like medicine. Even staunch libertarians will call you a monster for that,” noted online reseller “Tuck” Gentry. “But there are many people who see something impending and buy up something in order to turn a profit.”

“I made my first small fortune by seeing how big Ugg boots were becoming, buying a lot of smaller sizes wholesale, then charging stores more due to the increased demand.”

“For a situation like this, doing the same for medicine or food or medical supplies is wrong. But there are some people who had the foresight to look into previous incidents like this and find what sold out fast that wasn’t a need. I know a few people who bought a lot of toilet paper in January selling it for a lot now to some stores. I know someone else who did it with different types of salt.”

“There is still no defined line on what is or isn’t an acceptable product to do that with. That’s the boundary that needs to be set, not a wider net for resellers, as many, like me, only do that with luxury goods or products that aren’t needs. For an emergency we need a product list of what not to raise resell prices on. And the bill just avoids that. For wholesalers and those working with the free market it’s what we need so we don’t break the law.”

SB 1196 will be introduced to the Senate when it reconvenes, which is currently set for May 4th.

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