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Stopping Price Gouging

Q: I have heard quite a bit about price gouging in the past few months. I think it is horrible that people would try to profit from a national tragedy. When can I report price gouging, and does anyone really do anything about it?

A: You can report possible incidents of price gouging to my office. My Consumer Protection Division reviews complaints and, when appropriate, takes action against companies that try to profit from disasters – either natural ones like Tropical Storm Allison or the September terrorist attacks.

Under the Texas Deceptive Trade Practices Act, price gouging regulations go into effect when the Governor of Texas declares a state of disaster. This declaration can affect the whole state, as it did after the terrorist attacks, or just a specific region, as happened after Tropical Storm Allison and the collapse of the Queen Isabella Causeway in South Texas.

Once the Governor has declared a state of emergency, retailers are prohibited by law from demanding exorbitant or excessive prices for fuel, food, medicine or other necessities. There is no set amount that is considered exorbitant. In some cases, moderate increases, say 10 cents for a gallon of gas, would not be considered excessive. But $5.00 per gallon would be.

Many of the complaints we received in the wake of Tropical Storm Allison centered around carpet cleaners, towing companies and car repair dealerships. After the attacks of September 11, most of the complaints involved gasoline prices and rental car rates. We heard stories of rental car companies charging stranded airlines passengers twice their normal rates at their airport locations.

To file a complaint about possible price gouging, consumers can fill out one of our complaint forms. This can be done online through our Web site at www.oag.state.tx.us. Consumers can also call us at (800) 621-0508. When we receive a complaint, our investigators review it for possible action. In many cases, the situation can be resolved with a call to the business explaining the law. Many of the gas stations who had increased prices on September 12 offered customers a refund of the difference in price.

When the phone call doesn’t work, my office can seek legal action. The penalties for price gouging are fairly steep. The civil fine and penalties range from $2,000 per violation up to a maximum of $10,000. If seniors are targeted by the gouging, the penalties increase to up to $10,000 per violation. The maximum total for all penalties is $100,000.

And my office does take action.

On October 11, 2001, I announced that my office is filing a suit in conjunction with the Harris County Attorney against four Houston companies who allegedly engaged in price gouging after Tropical Storm Allison. Two are carpet cleaners, one is a towing company and the fourth is a car repair business.

The carpet cleaning companies allegedly sent invoices to insurance companies and consumers for services not rendered or that were excessive in amount. One company allegedly billed 17 consumers for between $6,686 and $17,800. The towing company allegedly quoted consumers one price for towing service, only to raise the price once the company had towed the car to its lot. The car repair business allegedly billed consumers for services never performed.

For more information on the consumer protection services offered by the Office of the Attorney General, visit our Web site at www.oag.state.tx.us