Democrats Raise Possibility of Federal Price Gouging Ban With FTC

Asserting that “[p]rice gouging laws are a widely used, important tool to protect consumers from corporate wrongdoing,” a group of Democratic lawmakers wrote to Federal Trade Commission Chair Lina M. Khan, asking her to provide information about whether a federal price gouging ban would be helpful to federal regulators to help them combat “a large-scale, multi-state emergency such as Hurricane Helene.”  

Noting that nearly 40 states have price gouging laws, the lawmakers wrote that, "A federal price gouging law would strengthen and complement state-level efforts to combat price gouging.”  They argued that a federal law would be useful because it would provide “baseline consumer protections to call consumers, no matter where they live.”  They explained that state laws have varying requirements about when price gouging laws take effect and what triggers their effectiveness.  They also explained that a federal ban could be helpful when price gouging occurs further up in the supply chain or where it impacts consumers in multiple states. The lawmakers wrote, “The current regulatory system forces state attorneys general to focus on smaller retailers operating within their state, who are often themselves victims of price gouging from larger suppliers.” 

The lawmakers asked the FTC to address a few key issues, including: 

• What authorities does the FTC currently have to combat price gouging and how are they deployed?
• How does the FTC's authority overlap with state enforcement power? 
• Would a federal ban on price gouging support state efforts to combat price gouging? 

As the lawmakers noted, enforcement related to price gouging has largely been focused at the state level.  Interestingly, though, the FTC, along with the Department of Justice and the Consumer Financial Protection Bureau, recently ssued a joint warning about price gouging.  Deputy Assistant Attorney General Manish Kumar said, “Companies are on notice: do not use the hurricane as an excuse to exploit people through illegal behavior.  The Antitrust Division and its law enforcement partners will act quickly to root out anticompetitive behavior and use every tool available to hold wrongdoers accountable.”

These developments are an important reminder for retailers and others to ensure not only that their pricing practices comply with state price gouging laws, but that they comply with federal laws prohibiting unfair or deceptive acts or practices.