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An April 21, 2020 press release by the Attorney General of Florida, Ashley Moody, sheds light on Florida’s efforts to deter and investigate allegations of price gouging by businesses that sell essential commodities necessary as a result of the COVID-19 pandemic.  According to the Attorney General, her office has received approximately 3,350 consumer contacts about the price of essential commodities and made more than 4,500 referrals and contacts to merchants about allegations of price gouging, refunds, and scams. AG Moody reports that, in enforcing Florida’s price gouging statute, her office has already issued 65 subpoenas to further investigations and worked with online platforms to deactivate web posts offering items at unconscionable prices. She announced more than $240,000 in refunds as a result of the efforts.

Below are five things to know about Florida’s price gouging laws and the state’s enforcement authority, geared toward Florida businesses.

1.         Do Florida’s price gouging laws apply to my business?

Florida’s price gouging law, Fla. Stat. 501.160(1)(a), applies to businesses that sell essential commodities, defined as “any good, service, material, merchandise, supplies, equipment, resources, or other article of commerce,” including “without limitation, food, water, ice, chemicals, petroleum products, and lumber necessary for consumption or use as a direct result of the emergency.”

2.         Has the State of Florida published a list of essential commodities?

Yes.  The following is a non-exhaustive list of items deemed essential commodities by the Attorney General of Florida during the COVID-19 state of emergency:

  1. Protective masks;
  2. Sanitizing and disinfecting supplies, such as hand sanitizer, gel, wipes, cleaning supplies for surface cleaning, and all commercial cleaning supplies;
  3. Personal protective equipment, including gowns, booties, gloves, and other protective gear; and
  4. COVID-19 test kits, swabs and related medical supplies used in administering tests.

Furthermore, as stated above, the definition of essential commodities includes every day grocery items such as food, chemicals, and any merchandise or supplies necessary for use or consumption or use as a result of the COVID-19 pandemic.  As a result, this provision would likely be interpreted to cover items commonly sold out at Florida grocery stores, such as toilet paper, paper towels, hand soap, and vitamins.

3.         How do I know if the price charged by my business for an “essential commodity” is permitted by the law?

In investigation allegations of price gouging, government investigators will conduct a fact-intensive analysis in which the State compares the reported price of the commodity sold by your business during the pandemic to the average price charged over the 30-day period prior to the declared state of emergency.  To determine if the price charged by your business was “unconscionable,” and thus evidence of price gouging, the State will consider whether the amount charged during the COVID-19 pandemic represents a “gross disparity” with the average price of the goods or services prior to the pandemic.

4.         What do I do if I receive a subpoena, preservation letter, or other correspondence from the Office of the Attorney General concerning price gouging?

  • Carefully review each of the documents received from the Attorney General.
  • Notify or retain counsel to inform them of the subpoena and to engage their assistance in handling the company’s compliance with the subpoena.
  • Take steps to preserve the information demanded by the Attorney General.  Work with counsel to identify documents that are or may be within the scope of the subpoena, and to identify custodians and locations of the requested records.
  • Work with counsel to contact the Attorney General’s Office regarding next steps, including to understand and clarify the government’s request and to discuss the timing of your company’s response, including whether any extension of time is needed.

5.         What are the potential penalties for a price gouging violation?

Compliance with the price gouging statute is critical, as the State can seek civil penalties of up to $1,000 per violation; and up to a total of $25,000 for multiple violations committed in a single 24-hour period.

It is also key to remember that the exigent circumstances surrounding COVID-19 have placed government regulators and consumers on high-alert concerning potential fraud and efforts by individuals or companies to improperly profit from the nationwide state of emergency.  As a result, your well-intentioned efforts could draw attention from regulators at the federal and state level. To best ensure the lawfulness of your marketing or sales of essential goods, you should work closely with your legal counsel and consider conducting an evaluation of your inventory and pricing metrics.

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