Critical Bill to Protect Consumers from Price Gouging Passes Key Policy Committee

CALPIRG

SACRAMENTO – Legislation to protect Californians from price gouging is one step closer to becoming law after Senate Bill 1196 (SB 1196) passed the Senate Committee on Public Safety Wednesday. Authored by State Sen. Thomas Umberg, the bill has bipartisan support in the legislature and is supported by consumer advocates, the Attorney General, and the California District Attorneys Association. 

Since the beginning of the novel coronavirus (COVID-19) outbreak, unscrupulous sellers have been using this crisis to take advantage of vulnerable Californians by dramatically increasing prices of essential goods. U.S. PIRG Education Fund’s analysis of essential supplies, including masks and hand sanitizer, sold on Amazon in late February found that more than half the products we examined saw price spikes of at least 50 percent compared to the average price. In just the past week, we’ve seen examples including a box of disposable gloves for $295 and a 5-pack of disinfecting wipes for nearly $170 — both nearly 10 times the normal price.

“Californians have enough to worry about with COVID-19. We shouldn’t also be subjected to absurd prices for supplies needed to keep ourselves safe on top of that,” said Claudia Deeg, CALPIRG associate. “Price gouging is a scourge, and we need our elected officials to take action to protect consumers now.”

Under California Penal Code Section 396, price gouging is illegal and punishable during a declared state of emergency. However, the code has not been revisited since 1992, and needs to be updated. In particular, price gouging often begins before an official state of emergency is declared. Based on U.S. PIRG’s analysis, we know that prices for certain supplies started spiking at the end of January 2020, yet California’s statewide emergency was not declared until March 4. 

“We are committed to protect Californians from those that prey on our community during the trying times of national or global emergencies. We will continue to use all of the tools at our disposal to prevent price gouging during this, and any future disaster,” said Senator Umberg. “There are brave men and women in the health and public safety sectors of our community whose lives are on the line every day. It is immoral and unacceptable to allow some to take advantage of this crisis when so many are fighting to help.”

Furthermore, current law sets price gouging protections to expire after 30 days, yet we know that price gouging is continuing as we enter our third month of the pandemic. SB 1196 addresses these issues by authorizing the governor or Legislature to extend these protections and to set a date prior to an emergency declaration as a baseline for pricing. Additionally, SB 1196 would ensure law enforcement can prosecute all instances of price gouging by closing the loophole in price gouging law for new sellers.

“Members of the United Food and Commercial Workers Union (UFCW) are on the front lines of the COVID-19 pandemic keeping Californians fed and healthy,” said Amber Baur, Executive Director of UFCW Western States Council. “Price gouging on critical supplies, including masks and hand sanitizer, puts our essential workers at risk if they cannot obtain the goods necessary to protect themselves. We’re proud to support this legislation that will help keep essential workers healthy while remaining on the job and able to serve their essential functions.” 

“Price gougers are ripping off consumers by dramatically inflating the costs of essential goods in the midst of a pandemic,” stated Nancy Peverini, legislative director of Consumer Attorneys of California. “We need to amend California’s existing price-gouging law to better protect our community from this deplorable practice.”

“The COVID-19 pandemic poses unprecedented threats to consumers,” said Suzanne Martindale, Consumer Reports Senior Policy Counsel & Western States Legislative Manager. “Senate Bill 1196 is a key step in improving protections to end price gouging once and for all.”

“Passing Senate Bill 1196 is a crucial step in protecting Californians during the COVID-19 pandemic. We look forward to continuing to work with Sen. Umberg to finally end price gouging,” finished Deeg.

Senate Bill 1196 will now head to the Senate Standing Committee on Appropriations.

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CALPIRG is a statewide, non-profit public interest group that works to protect Californians from threats to our health, safety and financial security.