Coronavirus (COVID-19) Alert: New Jersey Consumer Fraud Act Prohibits Price Gouging
You’ve likely heard about people hoarding pallets of hand sanitizer or toilet paper during the past few weeks due to concern over the coronavirus (COVID-19) pandemic. In fact, authorities in Tennessee recently investigated a man who stock-piled 17,700 bottles of hand sanitizer and was suspected of “price gouging,” or unreasonably inflating the cost of a scarce and necessary product during this time of crisis due to the coronavirus.
Coronavirus Price Gouging
Although this is an extreme example during an unprecedented situation, New Jersey’s Consumer Fraud Act (CFA) applies with great force during states of emergencies such as the current pandemic. On March 9, 2020, Governor Murphy signed an Executive Order declaring a state of emergency and, among other things, re-emphasizing the role of the CFA and discouraging individuals and businesses from engaging in this prohibited conduct.
Murphy’s March 9, 2020, Executive Order specifically states the following with regard to price gouging:
New Jersey's Consumer Fraud Act, N.J.S.A. 56:8-107 et seq., prohibits excessive price increases during a declared state of emergency, or for 30 days after the termination of the state of emergency.
The relevant provision of the CFA, N.J.S.A. 56:8-107, which is referenced in Murphy’s Executive Order, declares as follows:
The Legislature finds and declares that during emergencies and major disasters, including, but not limited to, earthquakes, fires, floods or civil disturbances, some merchants have taken unfair advantage of consumers by greatly increasing prices for certain merchandise. While the pricing of merchandise is generally best left to the marketplace under ordinary conditions, when a declared state of emergency results in abnormal disruptions of the market, the public interest requires that excessive and unjustified price increases in the sale of certain merchandise be prohibited. It is the intention of the Legislature to prohibit excessive and unjustified price increases in the sale of certain merchandise during declared states of emergency in New Jersey.
N.J.S.A. 56:8-107. Businesses that are fortunate enough to remain open during the current State of Emergency should take note of this provision and act accordingly.
New Jersey Consumer Fraud Act
The CFA is a strong tool for New Jersey consumers and can be the death knell for unwary businesses. The Act permits the Attorney General to prosecute violations of the act in a civil capacity and impose fines, penalties, and damages on behalf of New Jersey consumers. Individual plaintiffs, or potentially a class of plaintiffs, can file private actions against companies. If successful, these lawsuits can result in treble (triple) damages and an award of attorneys’ fees.
We here at Norris McLaughlin are prepared to help you weather the storm during these difficult times. Should you have any questions, please feel free to contact me at (908) 252-4236 or ealvarez@norris-law.com.