OLR Bill Analysis

SB 60

AN ACT PROHIBITING PRICE GOUGING DURING SEVERE WEATHER EVENTS.

SUMMARY:

This bill bars excessive price increases for goods and services in circumstances the governor proclaims to be a severe weather event. It expands current law which prohibits price gouging for (1) products under a civil preparedness emergency declaration, (2) products and services under a supply emergency declaration, and (3) energy resources during abnormal market disruptions.

During a severe weather event, no person can sell or offer to sell any goods or services for an “unconscionably excessive price. ” Under the bill, whether a price is unconscionably excessive is based on several factors, which a defendant may rebut with evidence that additional costs out of his or her control were imposed on the defendant for the goods or services.

A violation is an unfair trade or deceptive practice. Each day on which the violation occurs or continues is a separate offense.

EFFECTIVE DATE: Upon passage

SEVERE WEATHER EVENT

Under the bill, the governor may proclaim a severe weather event emergency exists when adverse weather conditions create an unusually high demand for consumer goods or services. To make a proclamation, the governor must post a notice on his website, including the event's start and later, its end date. Current law authorizes the governor to proclaim a civil preparedness or supply emergency.

PRICE GOUGING

During a severe weather event, no person in the distribution chain of consumer goods or services can sell or offer to sell any goods or services for an unconscionably excessive price. Consumer goods and services are those vital and necessary for consumer health, safety, or welfare and are used, bought, or rendered primarily for personal, family, or household purposes, including lodging, snow removal, flood abatement, and post-storm cleanup or repair services. The bill excludes energy resource sellers (e. g. gasoline), who are covered under a separate price gouging law.

The bill does not specify who determines whether a price is unconscionably excessive, but the Department of Consumer Protection (DCP) commissioner and the court are authorized to impose penalties based on their findings. They must consider whether: (1) the price was unconscionably excessive, (2) there was unfair leverage or unconscionable means, or (3) a combination of these factors.

Under the bill, prima facie evidence of excessive pricing is (1) a gross disparity between the price of the goods or services and their value measured by the average price 30 days before the severe weather event or (2) evidence that the price grossly exceeded the price at which the same or similar goods or services were readily obtainable by other consumers in the trade area.

Prima facie evidence is defined as evidence that will establish a fact or sustain a judgment unless contradictory evidence is produced (Black's Law Dictionary, 7th ed. ). Under the bill, a defendant may challenge or rebut a prima facie case with evidence that additional costs out of his or her control were imposed on the defendant for the goods or services.

By law, the DCP commissioner and the courts are authorized to make findings of unfair or deceptive practices. The bill specifies that it does not limit this authority only to circumstances or complaints under a governor's severe weather event emergency proclamation.

BACKGROUND

Price Gouging Law

The law prohibits anyone from increasing the retail price of any goods, but not services, when the governor issues a disaster or transportation emergency declaration or the U. S. president issues any major disaster or emergency declaration (CGS 42-230).

The governor is authorized to proclaim a state of civil preparedness emergency in the event of a serious disaster. Such a proclamation is in effect when filed with the secretary of the state and the governor's expanded powers continue until he proclaims an end to the emergency (CGS 28-9).

Supply Emergency

In the event of a state-wide, regional, or threatened shortage of a product or service because of an abnormal market disruption, the governor may proclaim a supply emergency exists. He may then designate a product or service to be in short supply and impose price restrictions or ration them (CGS 42-231).

Under a supply emergency, no one can sell or offer to sell a product or service at a price higher than it was sold or offered in the course of business just before the declaration (CGS 42-232).

Connecticut Unfair Trade Practices Act (CUTPA)

The law prohibits businesses from engaging in unfair and deceptive acts or practices. CUTPA allows the DCP commissioner to issue regulations defining what constitutes an unfair trade practice, investigate complaints, issue cease and desist orders, order restitution in cases involving less than $ 5,000, enter into consent agreements, ask the attorney general to seek injunctive relief, and accept voluntary statements of compliance. It also allows individuals to sue. Courts may issue restraining orders; award actual and punitive damages, costs, and reasonable attorneys fees; and impose civil penalties of up to $ 5,000 for a willful violation and $ 25,000 for violation of a restraining order.

COMMITTEE ACTION

General Law Committee

Joint Favorable

Yea

17

Nay

1

(02/23/2012)