NY State Senate Bill 2017-S5440

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2018	referred to consumer protection
Mar 28, 2017	referred to consumer protection

2017-S5440 (ACTIVE) - Details

See Assembly Version of this Bill:: A334
Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Amd §396-r, Gen Bus L
Versions Introduced in Other Legislative Sessions:: 2013-2014: S3656
2015-2016: S2825, A2133
2019-2020: S803, A237
2021-2022: S4565, A5850
2023-2024: S3079

2017-S5440 (ACTIVE) - Summary

Relates to price gouging; defines unconscionably excessive price for the purposes of prohibiting price gouging during abnormal disruption of the market.

2017-S5440 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S5440           REVISED MEMO 01/24/2018

SPONSOR: LANZA
 
TITLE OF BILL:  An act to amend the general business law, in relation
to price gouging

 
PURPOSE OR GENERAL IDEA OF BILL:

To further define "unconscionably excessive price" in the context of
price gouging.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends Section 396-r of the General Business law. The bill
provides that during periods of abnormal disruption of the market for
consumer goods and services vital and necessary for the health, safety
and welfare. Of consumers, no party within the chain of distribution of
such consumer goods shall offer to sell goods for an "unconscionably
excessive price." Unconscionably excessive prices is further defined as
a price that is excessive as compared to the price at which the good or
service was sold or offered for sale by the seller in the usual course

of business immediately prior to the state of emergency.

A price will be deemed excessive if the price exceeds, by at least 10%,
the price at which the good "or service was sold immediately prior to
the state of emergency, unless the price charged is because of addi-
tional costs imposed by the supplier or other costs of providing the
good. In such situations, the price will be excessive if it represents
10% increase in the amount of markup from cost, compared to the markup
customarily applied by the seller in the usual course of business imme-
diately prior to the State of emergency.

Section 2 provides the effective date.

 
JUSTIFICATION:

In the wake of Hurricane Sandy, gas stations sought to capitalize on the
gas shortage by gouging the price of gas, charging customers a much
higher price than before the storm. Additionally, some hotels also
allegedly engaged in price gouging, charging upwards of $300 for a room
after the storm. Such nightly rates are not unusual in Manhattan and
other tourist destinations; however, for residents of the outer
boroughs, such prices were up to triple the amount they would have paid
for a room prior to the storm.

While the Attorney General's office is currently investigating and
imposing fines on such gas stations and other merchants for price goug-
ing after the hurricane, it is difficult for consumers to determine
whether price gouging is occurring because there is not an objective
definition.

Under current law, whether a price is "unconscionably excessive" is a
court determination. Evidence of price gouging includes a showing that
the amount charged represents a "gross disparity" between the price of
the goods or services and their value before the abnormal disruption of
the market; or the amount charged "grossly exceeded" the price at which
other goods were readily obtainable by other consumers in the trade
area. Additionally, there is no standard for what an abnormal disruption
of the market is. Thus, the bill defines an abnormal disruption of the
market as a disruption as declared by both, the Governor and the Commis-
sioner of the Division of Homeland Security and Emergency Services.

This bill would add more clarity to the law and would allow for a more
objective standard in the investigation of price gouging complaints,
rather, than placing determination in the hands of the courts.  Addi-
tionally, this would also allow consumers to know whether they are
victims of price gouging so that they may report such instances to the
Attorney General's office.

 
PRIOR LEGISLATIVE HISTORY:

2017: S.5440 - Referred to Consumer Protection/A.334 -Referred to
Consumer Affairs & Protection
2016: S.2825 - Referred to Consumer Protection/A.2133- Referred to
Consumer Affairs & Protection
2015: S.2825 - Referred to Consumer Protection/A.2133- Referred to
Consumer Affairs & Protection
2014: S.3656-A - Referred to Consumer Protection
2013: S.3656-A - Referred to Consumer Protection

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2017-S5440 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5440
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                              March 28, 2017
                                ___________
 
 Introduced  by  Sen.  LANZA  -- read twice and ordered printed, and when
   printed to be committed to the Committee on Consumer Protection
 
 AN ACT to amend the general business law, in relation to price gouging
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section  1.  Section  396-r of the general business law, as amended by
 chapter 510 of the laws of 1998, subdivision 4 as amended by chapter 224
 of the laws of 2008, is amended to read as follows:
   § 396-r. Price gouging. 1. Legislative findings and  declaration.  The
 legislature  hereby  finds that during periods of abnormal disruption of
 the market caused by strikes, power failures, severe shortages or  other
 extraordinary  adverse  circumstances,  some parties within the chain of
 distribution of consumer goods have taken unfair advantage of  consumers
 by  charging  grossly  excessive prices for essential consumer goods and
 services.
   In order to prevent any party within the chain of distribution of  any
 consumer goods from taking unfair advantage of consumers during abnormal
 disruptions  of  the  market,  the  legislature declares that the public
 interest requires that such conduct be prohibited and  made  subject  to
 civil penalties.
   2. During any abnormal disruption of the market for consumer goods and
 services  vital  and  necessary  for  the  health, safety and welfare of
 consumers, no party within the chain of distribution  of  such  consumer
 goods  or services or both shall sell or offer to sell any such goods or
 services or both for an amount which represents an unconscionably exces-
 sive  price.  For  purposes  of  this  section,  the  phrase   "abnormal
 disruption  of  the market" shall mean any change in the market, whether
 actual or imminently  threatened,  resulting  from  stress  of  weather,
 convulsion  of  nature,  failure  or shortage of electric power or other
 source of energy, strike, civil disorder, war, military action, national
 or local emergency, or other cause of  an  abnormal  disruption  of  the

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD01746-01-7

 S. 5440                             2
 
 market  [which],  WHERE SUCH ABNORMAL DISRUPTION results in the declara-
 tion of a state of emergency by the governor. For the purposes  of  this
 section,  the  term  consumer  goods and services shall mean those used,
 bought or rendered primarily for personal, family or household purposes.
 This prohibition shall apply to all parties within the chain of distrib-
 ution,  including any manufacturer, supplier, wholesaler, distributor or
 retail seller of consumer goods or services or both sold by one party to
 another when the product sold was located in  the  state  prior  to  the
 sale. Consumer goods and services shall also include any repairs made by
 any party within the chain of distribution of consumer goods on an emer-
 gency basis as a result of such abnormal disruption of the market.
   3.  [Whether  a price is unconscionably excessive is a question of law
 for the court.
   (a) The court's determination that a violation  of  this  section  has
 occurred  shall  be  based on any of the following factors: (i) that the
 amount of the excess in price is unconscionably extreme;  or  (ii)  that
 there  was  an  exercise  of unfair leverage or unconscionable means; or
 (iii) a combination of both factors in subparagraphs  (i)  and  (ii)  of
 this paragraph.
   (b)  In  any proceeding commenced pursuant to subdivision four of this
 section, prima facie proof that a violation of this section has occurred
 shall include evidence that
   (i) the amount charged represents a gross disparity between the  price
 of  the  goods or services which were the subject of the transaction and
 their value measured by the  price  at  which  such  consumer  goods  or
 services  were  sold  or  offered for sale by the defendant in the usual
 course of business immediately  prior  to  the  onset  of  the  abnormal
 disruption of the market or
   (ii)  the  amount charged grossly exceeded the price at which the same
 or similar goods or services were readily obtainable by other  consumers
 in the trade area.]
   (A)  A  PRICE IS NOT AN "UNCONSCIONABLY EXCESSIVE PRICE" IF ANY ONE OF
 THE FOLLOWING APPLIES:
   (I) IT IS TEN PERCENT OR LESS ABOVE THE SELLER'S PRICE FOR THAT  PROD-
 UCT  IMMEDIATELY  PRIOR  TO THE DECLARATION OF THE STATE OF EMERGENCY BY
 THE GOVERNOR;
   (II) IT IS TEN PERCENT OR LESS ABOVE CURRENT PRICES FOR  THAT  PRODUCT
 IN ANY AREA OUTSIDE THE GEOGRAPHIC SCOPE OF THE DECLARATION OF THE STATE
 OF EMERGENCY OR AN ADJOINING STATE, TAX-ADJUSTED;
   (III)  IT  IS  TEN PERCENT OR LESS ABOVE THE SUM OF THE SELLER'S:  (A)
 ACQUISITION OR REPLACEMENT COST, WHICHEVER IS HIGHER; PLUS (B) THE MARK-
 UP CUSTOMARILY APPLIED BY THE SELLER IN THE  USUAL  COURSE  OF  BUSINESS
 IMMEDIATELY  PRIOR  TO  THE DECLARATION OF THE STATE OF EMERGENCY BY THE
 GOVERNOR;
   (IV) IT IS ATTRIBUTABLE TO  FLUCTUATIONS  IN  APPLICABLE  REGIONAL  OR
 NATIONAL SPOT OR COMMODITY MARKETS; OR
   (V)  IT  IS  A  CONTRACT PRICE OR PRICE FORMULA AGREED TO PRIOR TO THE
 DECLARATION OF THE STATE OF EMERGENCY BY THE GOVERNOR.
   (B) A defendant may rebut a prima facie case with evidence that  addi-
 tional costs not within the control of the defendant were imposed on the
 defendant for the goods or services.
   4.  Where a violation of this section is alleged to have occurred, the
 attorney general may apply in the name of the People of the State of New
 York to the supreme court of the State of New York within  the  judicial
 district  in  which  such  violations  are  alleged to have occurred, on
 notice of five days, for an order enjoining or restraining commission or

 S. 5440                             3
 
 continuance of the alleged unlawful acts. In any  such  proceeding,  the
 court  shall  impose  a civil penalty in an amount not to exceed twenty-
 five thousand dollars  and,  where  appropriate,  order  restitution  to
 aggrieved consumers.
   § 2. This act shall take effect immediately.

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Senate Bill S5440

Sponsored By

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

2017-S5440 (ACTIVE) - Details

2017-S5440 (ACTIVE) - Summary

2017-S5440 (ACTIVE) - Sponsor Memo

2017-S5440 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S5440

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Sponsored By

Andrew J. Lanza

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

2017-S5440 (ACTIVE) - Details

2017-S5440 (ACTIVE) - Summary

2017-S5440 (ACTIVE) - Sponsor Memo

2017-S5440 (ACTIVE) - Bill Text download pdf

Comments