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Price Gouging Possible Following West Tennessee Flooding

In light of evacuations of some West Tennesseans due to flooding, Attorney General Bob Cooper and Gary Cordell, director of the Department of Commerce and Insurance's Division of Consumer Affairs, are reminding consumers to be alert to potential price gouging.

Some individuals may take advantage of evacuees who need shelter by unreasonably or excessively hiking the prices they charge for hotel or motel rooms. This illegal practice is called price gouging. The state laws regarding price gouging also apply to charging excessively or unreasonably high rates for other basic, essential items flood victims may need such as fuel, cleaning products and building supplies.

"Tennesseans have been very cooperative and respectful of their fellow Tennesseans during the most recent series of natural disasters," Attorney General Cooper noted. "We are, however, prepared to take action against those who might needlessly raise rates to profit from those unfortunate people who are displaced by flooding."

"Tennessee has seen an unbelievable number of weather-related emergencies in recent weeks, and our heart goes out to people who have been adversely affected," says Consumer Affairs Director Gary Cordell. "While there have not been many complaints of price gouging, we would like to emphasize to consumers to contact us if they have questions about price fluctuations in the marketplace. The easiest way to do that is to use our online complaint form."

The form for filing a complaint related to price gouging is at tn.gov/consumer/PriceGougeCmplnt.shtml. The Attorney General, in conjunction with the Division of Consumer Affairs, reminds consumers and business owners that price gougers will be aggressively pursued and prosecuted as they have in past disasters. In the horrific aftermath of past disasters such as Hurricanes Ike and Gustav in 2008, the Office of the Attorney General has taken action against hotels as well as gas stations for violations of the Tennessee Consumer Protection Act regarding inflated prices. After Hurricanes Ike and Gustav, the Attorney General settled price gouging claims with 60 gas stations.

The price gouging act specifically cites that it is illegal to set prices that are grossly in excess of the price generally charged immediately prior to the disaster. The price gouging act is automatically activated when the Governor declares a disaster. Tennessee Gov. Bill Haslam declared a State of Emergency at noon on Tuesday, May 3, 2011. Another law makes illegal "unreasonably raising prices or unreasonably restricting supplies or essential goods, commodities or services in direct response to a . . . natural disaster," regardless of whether the event occurred in Tennessee. Penalties for violations of the act are up to $1,000 per violation and are Class B misdemeanors. Additionally, the Attorney General in conjunction with the Division of Consumer Affairs can request that a court issue injunctions and order civil penalties of up to $1,000 for each violation. The State can also seek refunds for consumers.


Published May 7, 2011

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