Post-Sandy Price Gouging Warning

Nov 15th, 2012 | By | Category: Headline News

The following is a statement from Attorney Pete O’Connell, legislative advisor for the Empire State Towing and Recovery Association (ESTRA) of New York:

It has come to my attention that some tow bills that have arisen in the aftermath of Superstorm Sandy are alleged to constitute price gouging. In this regard, Section 396-r of New York’s General Business Law (which deals with price gouging) kicks in “…during periods of abnormal disruption of the market caused by strikes, power failures, severe shortages or other extraordinary adverse circumstances.” Needless to say, Sandy constitutes such an extraordinary adverse circumstance.

You may be found guilty of price gouging for:

  • Charging an amount that grossly exceeds the amount that you charged immediately prior to the emergency or
  • Charging an amount that grossly exceeds the amount charged by other towers in your market area.

It is legal to consider extenuating circumstances, such as retrieving a vehicle from water, etc., that may have been caused by Sandy. However, these charges must be reasonably related to the services provided. If found guilty of price gouging, you may be assessed a civil penalty of $25,000 and be required to pay restitution to aggrieved customers.

Do not rely upon protections that you believe that you may enjoy by reason of Federal preemption. They can be overridden during times such as these.

The New York State Attorney General has issued a press release that includes towing as a service that could give rise to a claim of price gouging. Towers should consider this to be fair warning that excessive tow bills will not be tolerated and they should act accordingly.

Any questions, comments or suggestions, I can be reached at 518-465-6550 or by email at peter@hannanoconnell.com.