New York Attorney General Letitia James launched a rulemaking process to look into whether major corporations are using the pandemic and inflation as an excuse to unfairly raise the price of basic goods.
The first-ever price gouging rulemaking process by the Office of the Attorney General (OAG) will examine and address new evidence that some of the recent price hikes by big corporations were driven by profit not increased costs.
Through this process, Attorney General James aims to implement new price gouging rules that will crack down on pandemic profiteering and corporate greed.
“The rising costs of essentials and basic household items has had a real impact on working families,†said Attorney General James.
“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.â€
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.
The rulemaking 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. As evidenced by the recent spike in corporate profits, many companies are not sharing in the burden of the pandemic, nor are they neutral.
Evidence indicates that some companies are profiting by increasing costs for the people hit hardest by the pandemic.
Since the start of the pandemic, public reporting has highlighted instances of major corporations steadily increasing costs of goods onto 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 shot up 20 percent, the company profits are up 30 percent.
Shipping prices are way up, while shipping company profit margins are breaking records.
Chevron and Shell posted record profitability 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.
New York’s law bans “unconscionably excessive†prices, which include both “unconscionably extreme†prices and prices set through “unfair leverage or unconscionable means.â€
New York’s statute is also unique in the wide scope of covered goods and services, and the fact that it covers all actors 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 Advance Notice of Proposed Rulemaking (ANPR) outlines the evidence that some of the price increases for vital and necessary goods may violate New York law and lays out the incentive structures that can lead to price gouging.
The ANPR also discusses the unique harms caused by price gouging and the economic justification for prohibiting this form of profiteering. The ANPR has been submitted to the State Register for publication and will be officially available on or about March 9.
The OAG 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. ■