New York AG To Investigate Possible Pandemic Price Gouging

NEW YORK STATE — New York Attorney General Letitia James announced her office will look into whether inflation is really to blame for all the increasing prices lately, or whether companies are using the pandemic as an excuse to gouge consumers.

James said her office is launching a rule-making process to examine and address evidence that some recent price hikes facing consumers were driven by profit rather than increasing costs. It is the first price gouging rule-making process the AG's office has undertaken.

Through the process, James said her office aims to implement new price gouging rules to crack down on pandemic profiteering.

“The rising costs of essentials and basic household items has had a real impact on working families,” James said. “Throughout the pandemic, hardworking New Yorkers have been struggling to make ends meet, but big corporations have been celebrating record-breaking profits. It doesn’t add up. My office is prepared to use every tool in our toolbox to crack down on price gouging and pandemic profiteering.”

New York’s price gouging law bans companies from taking advantage of a crisis to charge excessive prices for vital and necessary goods and services. James said the rule-making process will explore growing evidence that big corporations appear to have used the pandemic as an excuse to charge more for necessary goods, such as gas and oil, food and cars. Evidence indicates that some companies are profiting by increasing costs for people hit hardest by the pandemic, James said.

Since the start of the pandemic, public reporting has highlighted instances of major corporations steadily increasing costs of goods for consumers, despite experiencing record high revenue.

Some examples of those reports include:

• Beef prices rose 30 percent, while meatpackers have been celebrating an average of 120 percent increase in profits.
• The cost of Proctor and Gamble diapers, toothpaste, detergent and tampons has risen throughout the pandemic, while Proctor and Gamble has boasted record-breaking profits.
• Chipotle prices are up 10 percent from January 2021 to January 2022, which the company blames on labor shortages, but their operating income rose 181 percent.
• While the cost of a basic cup of coffee at Starbucks has risen 20 percent, company profits are up 30 percent.
• Shipping prices are way up, while shipping company profit margins are breaking records.
• Chevron and Shell posted record profits while energy costs soared.

While not all of these may be illegal, some of them may fit the definition of price gouging under New York law, the attorney general said.

New York’s law bans “unconscionably excessive” prices, which include both “unconscionably extreme” prices and prices set through “unfair leverage or unconscionable means.” New York’s statute is also unique in the wide scope of goods and services it covers, and the fact that it covers everyone in the supply chain for those goods and services, including manufacturers, retailers, distributors, shipping firms and online platforms. The law also prohibits price gouging not just of consumers, but also small businesses and state and local governments.

The attorney general's office is seeking comment from the public on a wide range of questions about price gouging, including questions about industry tools that may obscure price gouging. Public comments may be submitted immediately and until April 22 at stopillegalprofiteering@ag.ny.gov.