North Carolina’s approach to handling price gouging serves as a model for other states, demonstrating that with the right legal tools, public awareness, and enforcement, the harmful effects of price gouging can be mitigated.
North Carolina Department of Justice and the Attorney General Office in Raleigh, NC.
By Joshua Peters
Price gouging, the practice of raising prices on essential goods and services to exorbitant levels during emergencies, has long been a controversial issue in North Carolina. This unethical practice preys on vulnerable consumers during times of crisis when they are least able to seek alternatives. While price gouging is not unique to North Carolina, the state has a notable history of addressing this problem, particularly in the 21st century, through legislation, enforcement, and public awareness.
Background
North Carolina's first significant encounters with price gouging occurred during the Great Depression and the World Wars, when shortages of goods led to inflated prices in some regions. However, it wasn't until the latter half of the 20th century that the state began to address price gouging with specific legal frameworks.
Governor Jim Hunt (1977-1985, 1993-2001) was instrumental in the development and implementation of emergency management policies in North Carolina. His administration laid the groundwork for modern price gouging laws, particularly through the North Carolina Emergency Management Act of 1977. This law authorized the Governor to declare a state of emergency, which triggers protections against price gouging under state law.
Current Events
The 21st century has seen several high-profile cases of price gouging in North Carolina, particularly in the wake of natural disasters.
In September 2018, Hurricane Florence caused widespread devastation across North Carolina. As the hurricane approached, reports of price gouging surged. Consumers reported excessively high prices for essentials such as gasoline, water, and hotel rooms. In one instance, a gas station in Raleigh was accused of charging nearly $10 per gallon of gasoline. The state’s Attorney General’s office received over 1,300 complaints related to price gouging, leading to investigations and eventual penalties for some businesses. Attorney General Josh Stein responded to these complaints by launching investigations and pursuing legal action against violators.
The COVID-19 pandemic brought a new wave of price gouging complaints in North Carolina, as demand for personal protective equipment (PPE), hand sanitizer, and other essential items skyrocketed. The Attorney General’s office investigated and addressed instances where prices for these goods were raised unreasonably. One case involved a store selling N95 masks at over three times the normal price, leading to legal action and fines.
The Colonial Pipeline cyberattack in May 2021 led to a temporary gas shortage across the southeastern United States, including North Carolina. Panic buying exacerbated the situation, and reports of price gouging quickly emerged. Gas stations were found charging more than $5 per gallon, far above the typical price. The North Carolina Attorney General’s office, led by Stein and supported by David M. Smith, Director of the Consumer Protection Division, responded by issuing warnings and investigating complaints, resulting in penalties for those found to be exploiting the situation.
Response to Price Gouging
North Carolina has a robust legal framework to combat price gouging, primarily enforced through the state’s Attorney General’s office. The North Carolina General Statutes, specifically Chapter 75, Article 1, Section 75-38, explicitly prohibit price gouging during a state of emergency. Violators can face civil penalties, including fines of up to $5,000 per violation, and the possibility of restitution to affected consumers.
The state has also taken steps to increase public awareness about price gouging. The Attorney General’s office maintains a hotline for consumers to report suspected price gouging and regularly updates the public during emergencies about their rights and how to file complaints.
In response to the price gouging incidents following Hurricane Florence, the Attorney General’s office pursued legal action against several businesses, resulting in settlements and fines. These actions not only provided restitution to consumers but also sent a strong message that price gouging would not be tolerated in North Carolina.
During the COVID-19 pandemic, the state took a proactive approach by closely monitoring prices and swiftly addressing complaints. The Attorney General’s office worked with online marketplaces to remove listings that appeared to engage in price gouging and issued cease-and-desist letters to businesses inflating prices.
While North Carolina has made significant strides in combating price gouging, challenges remain. The rise of online marketplaces and the global nature of supply chains complicate enforcement efforts. However, the state’s continued vigilance and commitment to protecting consumers suggest that price gouging will be met with firm resistance in the future.
North Carolina’s approach to handling price gouging serves as a model for other states, demonstrating that with the right legal tools, public awareness, and enforcement, the harmful effects of price gouging can be mitigated. As natural disasters and other emergencies become more frequent, the state's experiences and strategies will likely continue to evolve, ensuring that consumers are protected during their times of greatest need.