The New York Attorney General’s Office (OAG) recently announced several proposed rules are intended to combat price gouging in New York during state emergencies. The OAG promulgated the rules pursuant to its authority under New York General Business Law 396-r, which makes it unlawful to sell goods and services “vital and necessary for the health, safety and welfare of consumers or the general public” at an “unconscionably excessive price” during “any abnormal disruption of the market.” The statute defines an abnormal disruption of the market as “any change . . . resulting from stress of weather, convulsion of nature, failure or shortage of electric power or other source of energy, strike, civil disorder, war, military action, national or local emergency, or other cause . . . which results in the declaration of a state of emergency.” N.Y. Gen. Bus. Law § 396-r(2).
OAG launched the rulemaking process in March 2022, and developed its rules using comments submitted by consumers and industry experts. These are the first rules promulgated under the price gouging statute since it was amended in 2020 to give OAG rulemaking authority. The proposed rules include:
- a determination that price increases over 10% during an abnormal disruption of the market may constitute price gouging;
- a prohibition on companies with a 30% market share increasing profits during an abnormal disruption of the market;
- benchmarks for companies that rely on dynamic pricing (e.g., rideshare services) based on the median price of a good or service during the week before the emergency;
- extended protections against price gouging for new products or services created after an emergency begins (e.g., at-home COVID-19 tests); and
- clarification on what costs a company must demonstrate to justify a greater than 10% price increase during an abnormal disruption of the market.
These proposed rules are only the latest examples of OAG’s efforts to crack down on alleged price gouging. In May 2022, OAG sent cease-and-desist letters to more than 30 retailers claiming that the retailers were overcharging for baby formula in violation of N.Y. GBL 396-r.
The Notice of Proposed Rulemaking was issued on March 2, 2023 and is subject to a 60-day public comment period.