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What is price gouging?

Mar 20, 2020 | White Collar Crimes |

There’s a lot to take in about the effect that the COVID-19 virus is having on the country, but one issue that seems to have caught everyone’s attention is the issue of hoarding and price gouging. Those are twin problems that often crop up during any major disaster.

Essentially, when someone hoards products that are in crucial demand during any kind of major crisis, then offers to sell part of their hoard at an outrageously high markup, that’s price gouging. It’s done with the full intent to take advantage of a situation that will encourage people to buy things they may not normally need at a price they would never normally pay. Some examples include charging $10 for a bottle of water after a hurricane or snapping up 17,700 bottles of hand sanitizer to resell for $70 each when there’s a viral outbreak in the area.

How does that differ from ordinary capitalism? After all, everything is marked up from its source. Retailers buy from wholesalers and mark the price up every day. Why can’t independent operators do the same thing when they have the chance?

Well, it’s largely a matter of timing. If you can get $70 for a $3 bottle of hand sanitizer under normal conditions, that’s basic capitalism. However, trying to sell anything that might be an “essential commodity” at a vastly inflated price in a time of public crisis is illegal.

In Florida, for example, once a crisis begins, you can’t inflate the price of anything that might be considered essential much beyond whatever it was selling for, on average, 30 days prior to the start of the emergency.

When this crisis abates, there are a lot of people who could be in trouble for price gouging simply because they didn’t realize what they were doing wasn’t just essentially being smart business professionals. If you’re among them, an experienced defender can help you.

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