United States: Anatomy Of A Price Gouging Case (Video)

Last Updated: May 8 2017
Article by Edward J. Page

Tell us a little about your background and some of the price gouging cases you've been involved with.

I started out in the state attorney's office, then worked as a U.S. Attorney, and then as a special prosecutor for Ken Starr in Washington, D.C. In total, I was a prosecutor for 18 years, and joined Carlton Fields in 2000. Soon after that, the Tampa area was battered by several hurricanes — in 2004, and again in 2005. You may remember Hurricane Charlie. At the time, we thought it was going to devastate Tampa. After intersecting with a cold front, Charlie went up through the corridor in the middle of the state and wreaked havoc.

As a result of all the storms of '04 and '05, the Florida Attorney General's Office launched numerous price gouging investigations under Florida Statue 501.160. I had the opportunity to learn the statute while defending several hotels and suppliers of gasoline and other commodities in price gouging investigations.

What is the definition of price gouging?

In essence, the definition comes from Florida Statute 501.160, which provides that during the 30 days before a state of emergency is declared, it's unlawful to sell, lease, offer to sell, or offer for lease, essential commodities, including but not limited to, supplies, services, provisions, or equipment that is necessary for consumption or use as a direct result of the emergency; dwelling units; or self-storage facilities, for an amount that grossly exceeds the average price for that item or commodity.

There are only two rarely applied exceptions that allow a vendor to raise its prices after a state of emergency is declared in Florida. A seller can justify the price by showing an increase in its costs, or if national market trends support a price increase.

There is a phrase, "unconscionable price." How does the law define "unconscionable?"

Well that's the problem. The definition I just read, which uses the phrase 'grossly exceeds the average price,' and the word 'unconscionable' are really not very well-defined in Florida law. As a result of that lack of definition, there isn't much guidance for gasoline stations, hotels, and sellers of other commodities like generators, on how much they can raise their prices, if at all, in anticipation of or during a declared state of emergency. Frequently, the people I represent in these matters are frustrated by the lack of a definition for 'grossly exceeds.'

The only comforting news is that, normally, the Florida Attorney General's Office doesn't undertake cases where there may be a 5 or 10 percent increase. It reserves its efforts for gross disparities and, although the terms 'gross disparity' and 'unconscionable price' are not really defined in the statute, we can get a sense of the meanings by reviewing complaints. These are civil, not criminal, cases. We'll talk about how they start in a bit, but if you look at three cases the Attorney General's Office filed on December 20, 2016 in response to either Hurricane Hermine or Hurricane Matthew, the price increases in these cases were more drastic. The increases, in  Hillsborough, Pinellas, and Pope Counties, ranged from 72 to 303 percent in one case, 89 to 238 percent in another, and 43 to 417 percent, in the last. To put this into context, let's consider a hotel room that was advertised at $100 a night. A 417 percent increase would mean that room went up to $417. So, those are the types of cases that most interest the Florida AG's office.

These are really just three examples of the more than 2,700 price gouging complaints that the news media reported following hurricanes Matthews and Hermine. Tell us a little about what happens next. What is the anatomy of a price gouging case?

Okay, so the first thing that happens is a storm forms in the gulf or in the eastern Atlantic. Everybody begins to watch the National Hurricane Center, including the office of the Attorney General and more specifically Governor Scott's office. Governor Scott, under Florida's constitution, has the power to enact executive orders. This is also a Presidential power at the federal level, but Governor Scott has his own authority as well. And Governor Scott enacted an executive order dealing with the tropical storm Hermine, which became Hurricane Hermine in August, as well as with Hurricane Matthew.

Normally, the next thing that happens is the storm is followed to see if it develops into a serious threat to Florida. If it does, the governor, in consultation with others, signs an executive order. We'll talk specifics here regarding Hurricane Matthew. Governor Scott signed Executive Order 16-230 on October 3, 2016, putting into effect certain prohibitions of law. On page nine of the executive order, under section nine, it became unlawful and a statutory violation for a person to sell or rent any room at an unconscionable price within the area where the state of emergency was declared. Some of these declarations are by county.

If the storm goes up the east coast, sometimes the declaration does not apply to west coast counties. But because they couldn't tell where Matthew would go, I believe this one was for the entire state.

But it's not just hotel rooms, right? It includes any services that people might need in an emergency?

Yes, any essential commodities — food, ice, gas, hotel rooms, lumber, plywood for windows, water, generators. Under Florida law, 'commodities' is defined quite broadly. Next, the storm comes through and vendors of ice, gas, hotel rooms, food, lumber, water, and the like, have to decide, 'What am I going to do about my price?' Normally when there's a shortage of items, the price goes up because that's how we do it here — it's the power of the market. If I have only three lemons to sell they're worth a lot more than if I have 500.

Without really knowing or understanding what price gouging is, businesses will often raise hotel room rates, or the prices of generators or other commodities. The storm passes. Once the executive order takes effect, the Florida Office of the Attorney General normally also activates the Attorney General's price gouging hotline so people can call in to report that they may have been price gouged.

That launches the media investigations you mentioned, resulting in reports that 2,700 complaints were lodged with the Attorney General's office. The AG has offices throughout the state to respond to hurricanes Matthew and Hermine. Next, the Attorney General's Office scrutinizes the complaint to see if, on its face, it holds water, so to speak. Then, the AG's Office decides whether to issue a subpoena to the entity or person that raised their prices or allegedly price gouged. That subpoena normally calls for documents and the like about the prices and how they were set, etc. Next, the Attorney General's Office gets the documents, evaluates them, and decides whether to bring a complaint as they did in three instances on December 20, 2016, which we talked about.

Once they file the complaint, the vendor then has the chance to respond?

Yes, normally it's quite acceptable and proper to try to avoid having a civil complaint filed against you. Regardless of whether the vendor has a lawyer, it's often good practice to tell your story — if you have one — about why you raised your prices. Doing so might help you avoid a civil complaint that, again, will get reported in the media.

I brought with me today an article that appeared in the Tampa Bay Times, December 23, 2016. The headline was 'Area Hotels Accused of Gouging.' These three cases were filed on December 20 at 5:02 pm. Two days later, the article appears. So it doesn't take long. Being accused of price gouging is like being accused of being a racketeer. No one likes even the sound of the words. So, although nothing's been proven, the mere allegation of price gouging during a storm when people were in need is undesirable. Often, it's good to go ahead and  make a presentation or a case, if you will, to the Attorney General's Office to try to avoid a complaint. But, as we saw recently, sometimes that option is unavailable. The price increases are just so substantial that you can't avoid it.

In the majority of cases, how defensible are the increases?

It depends. Sometimes they're very defensible. For example, gasoline price increases are driven by the wholesale market, retail market, and supply and demand. Pricing is very complicated. Normally, a gas station owner doesn't see that a state of emergency has been declared, go out to the pumps, and say, 'Add 50 cents.' It's normally driven by a long market chain. It could be, for example, that a hurricane destroyed the fleet that was carrying the gas or the port where it was coming from, making delivery impossible to the Tampa Bay area. This would cause prices to go up. It's still smart to think 'ready, aim, fire' before raising prices if there's a hurricane or big storm in the Gulf or the Atlantic, because you know you'll attract the attention of the Attorney General's office. And it's just wise to respond to that rather than react, even if there is a shortage of the commodity. We don't want to attract scrutiny, and we don't want to violate Florida's price gouging statute. It's good politics to stay out of the news.

Now you said these weren't criminal cases?

Correct. No one goes to jail. These are civil cases. The burden of proof is preponderance of the evidence. Many people think that whenever the Attorney General's Office gets involved, the case is criminal. While the AG does have some criminal jurisdiction, it's not for price gouging cases.

So, if you're one of these businesses that received a complaint, what do you do?

Well, you'll get served with your complaint. They're served just like a regular civil complaint in Florida, and you have a certain timeframe to respond. Normally it's 20 days once you're served, unless you negotiate an extension of time. And so you have to answer the allegations, whether you admit, deny, or have no information or knowledge. Then the case proceeds like any other civil case.  Cases can be mediated. Cases can be set for trial. Most of the time, there's a big effort to try to settle them. But price gouging penalties are very rigorous. So, the people named in the complaints are often concerned about resolving their cases.

The Attorney General sets forth the penalties in the complaints. I'm going to read from one of them: 'Pursuant to Florida law, the defendants are subject to a penalty of up to $1,000 per violation with an aggregate total not to exceed $25,000 for any 24-hour period.' So, if I sold four generators at an unconscionable price, my exposure is $1,000 per violation — in other words, per generator. If it's a hotel room, it's $1,000 per hotel room up to a $25,000 maximum. And it goes on and on. There are other penalties too. So there is a financial incentive to get it right and try to avoid scrutiny.

Do you have tips for businesses that might find themselves in this situation? Either proactively before a complaint arises?  And then, once they get a complaint?

Yes, I do have some suggestions. Of course, as you might imagine, as a lawyer for over 30 years, I recommend getting a lawyer. Don't wait until you get the complaint.

Be proactive. When you see that a storm in the Gulf of Mexico, Caribbean, or the Eastern Atlantic is coming your way, know that Governor Scott has the power and authority to declare states of emergency or enact executive orders. Start thinking about what, if anything, you can do in consultation with a knowledgeable price gouging lawyer. May you raise your prices? Should you? Involve your lawyer in that decision-making process. Raising prices should be part of a rational 'ready, aim, fire' thought process. Not something you do because you're getting a lot of phone calls for rooms, gas, generators, or what have you and want to see if you can just double your price and hit a grand slam while the storm passes.

The other opportunity to get a lawyer involved comes once you get a complaint. But you'll know in advance that  you're going to get a complaint because most complaints are served after you get the subpoena. So as soon as you get the subpoena from the Florida Attorney General's Office seeking business records about evidence concerning the price gouging allegation, you should be speaking with a lawyer to find out what you need to do and how you can defend against the claims. Do you have a defense? What is your response?

What types of evidence do people need to provide when they're filing a complaint against a business?

There's a form you can use on the Attorney General's Office website. It requests your name, address, contact information, and provides a block for you to type in what happened. Typical information may just be four or five sentences that say, 'I went to a gas station and the sign posted said $2.33 a gallon and when I put my credit card in and started pumping gas, it was really $3.33 a gallon.' For a hotel room, maybe there was an advertisement near the hotel that said 'all rooms $99.' You show up and there are only four rooms left, and they cost $300. Or power goes out at your house and you need a generator. But people are selling generators at twice Home Depot's price because the Home Depots ran out of them. People will buy up a bunch of generators, double the price, and become, sitting ducks for a price gouging complaint.

Because really, these vendors are playing on the fears of the consumers, right?

Some are, yes. Others are legitimately raising their prices to reflect demand, market conditions, or supply and demand. And, here's the important thing to remember: It's okay to raise your prices. It's not okay to raise your prices to an unconscionable level, or to a level that is grossly exceeds the price you sold the item at in the 30 days before Governor Scott declared the state of emergency. So it might be okay to raise your prices. Let's say a hurricane's coming to your hotel and you're going to be empty after the storm leaves so you've got to create a little bit of margin or safety net. You might raise your room prices by five or ten dollars. It just can't be unconscionable or a price that grossly exceeds what you offered before.

Do these price gouging statutes apply only for hurricanes or tropical storms?

No. They apply any time a declaration of emergency goes into effect. So you could have an ice storm, a fire, any kind of state of emergency that, as Governor Scott wrote in 16.230, impacts or poses a severe threat to the entire state of Florida — one where timely precautions must be taken to protect communities and the general welfare of the state.

Do you have any final takeaways for businesses?

I do. One of them is, if you want to avoid a price gouging inquiry from the Attorney General's Office, don't raise your prices after a state of emergency is declared. If you must, do so only in consultation with a lawyer and maybe your CFO. Together, determine about how much you can raise your prices to avoid falling under the undefined terms 'unconscionable price,' and 'grossly exceeds.' The easiest way to do this — and no one likes to hear this — is to simply not raise your prices during the 30 days before the state of emergency. That way you avoid scrutiny.

Another suggestion I have is to monitor the Governor's Office for states of emergency. You normally know they are coming when you see a storm on the way, but there's a website you can check. You can just Google 'executive orders.' They are listed for the past five or six years so you can see what one looks like. My other suggestion is to be really nice to your customers when they show up in stressful situations like running from a hurricane.

Especially now, when social media plays such a huge role in a company's branding and reputation, there are so many opportunities for people to share positive and negative experiences, whether through Facebook, Twitter, or review sites like Yelp, so I think that's great advice.


Thank you so much for talking to us today about price gouging. I think you've provided terrific advice for businesses, particularly in the state of Florida. And we'll be prepared for the upcoming hurricane season.

These are all timely pointers. The start of the new hurricane season on June 1 isn't that far away.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions