Natural disasters, like Hurricane Harvey, can bring out the best and worst in people. It is heartwarming to see folks coming together to perform selfless acts of kindness and generosity. And infuriating to see those that seek to profit from the misfortune of others. Nothing gets the public’s ire up more than businesses that engage in price gouging.
However, sometimes a company may be unfairly accused of price gouging, when market conditions for a business call for a price increase that is unrelated to the concurrent emergency situation. In fact, many economists defend price gouging, arguing that the practice prevents hoarding of resources as consumers purchase only what they really need.
The State of Texas does not agree, however. The Texas Deceptive Trade Practice Act (DTPA) was created to protect Texas consumers against unfair, false, and misleading business practices and to provide a procedural system to secure this protection. DTPA defines a series of actions and practices it deems to be unlawful acts under the act and outlines the process by which a consumer may seek remuneration.
With regards to hoarding, DTPA states that it is an unlawful act to take advantage of a disaster declared by the Governor under Chapter 418, Government Code, by:
- Selling or leasing fuel, food, medicine or another necessity at an exorbitant or excessive price; or
- Demanding an exorbitant or excessive price in connection with the sale or lease of fuel, food, medicine or another necessity.
When people think of price gouging as the result of a natural disaster, the first items that come to mind are fuel, food and water. The phrase “another necessity” is very broad, and can be interpreted to mean almost anything. And what exactly is considered an “excessive price?”
Recently, many large, national retailers have been accused of price gouging, including Home Depot, Raceway and Best Buy. But it isn’t just the large corporations who can be labeled as such. It can be street vendors, small grocers, and standalone restaurants. In times of emergency, the price gouging sensitivities of consumers and the news media are greatly heightened. An unhappy customer could report your company to the Attorney General’s office and falsely claim price gouging, knowing this accusation, during a time of emergency, will garner publicity and harm your company’s good name and standing in the community.
While you may not sell goods and services that are traditionally linked with price gouging, there’s no guarantee that a disgruntled customer won’t make that claim during a time of emergency. And defending against it might not be as simple as you think. Remember, The Texas Deceptive Trade Practice Act is broadly worded. If are in need of price gouging defense—or if you are accused of any other unlawful act as specified in the DTPA—contact a skilled business law attorney like those at Bennett Weston LaJone & Turner, P.C.