Governor Cuomo Signs COVID-19 Legislation Expanding NY Price Gouging Law to Include Personal Protection Equipment and Increasing Penalties

June.10.2020

On June 6, New York Governor Andrew Cuomo signed into law legislation (S.8189) that strengthens the state’s price gouging statute, in response to COVID-19. The legislation expands the current price gouging statute by including protections for personal protection equipment. The legislation amends the statute’s current definition of consumer goods to include any products or services that are vital or necessary to the health, safety, and welfare of consumers or the general public. The new law also extends the protections beyond only consumers or the general public to small businesses, hospitals, health care providers, and the state of New York.

According to the bill’s authors, the pandemic has resulted in “countless instances of egregious price gouging, particularly of medical supplies such as hand sanitizer, face masks, bandages, medical-grade apparel, and other crucial supplies that are desperately needed by our hospitals and other health care facilities.”

Based on these examples, the legislators argue the new law will act as a “strong deterrent to individuals seeking to use a pandemic or other emergency to enrich themselves at the expense of the general public and the health care workers who are fighting to keep [the public safe] at great personal danger to themselves.”

The legislation makes the following changes to the existing price gouging statute, Section 396-r of the New York General Business Law:

  • Amends the existing law by removing the word “consumer” before “goods and services” and expands the definition to include the following:

    • “essential medical supplies and services used for the care, cure, mitigation, treatment or prevention of any illness or disease, and
    • Any other essential goods or services used to promote the health or welfare of the public.”
  • Provides additional language for a defendant to rebut a prima facie case of price gouging by providing evidence that the “increase in the amount charged preserves the margin of profit that the defendant received for the same goods or services prior to the abnormal disruption of the market.”
  • Increases the potential amount of civil penalties awarded by the court. Current law provides a civil penalty up to $25,000 and restitution to the aggrieved parties. The legislation amends the law to allow the court to impose a civil penalty up to $25,000 “per violation or three times the gross receipts for the relevant good or services, whichever is greater.” This substantially increases potential amount of civil penalties.
  • Grants the New York Attorney General authority to promulgate rules and regulations “as necessary to effectuate and enforce the provisions.”

As noted in our previous post, state attorneys general have actively used their powers to pursue pandemic-related price gouging in their states. This new law provides the New York Attorney General more power by increasing the civil penalties and specifically covering essential medical and other personal protection equipment used during pandemics. Attorney General Letitia James made it clear during the pandemic she will not tolerate price gouging and has made good on that promise. Most recently, Attorney General James filed a lawsuit against a wholesale grocery distributor for alleged price gouging of Lysol disinfectant products to neighborhood grocery and discount stores. 

Businesses need to remain vigilant during the pandemic to closely monitor and document their prices of all products, especially personal protection equipment.