Texas has been through some rough times recently – and it appears as if it might not be over yet.
In addition to the widespread human and property damage caused by the winter storms that left millions of residents without heat and running water, a collateral concern had emerged as it often does in times of natural disasters.
It’s called “predatory pricing” but is more commonly known as “price gouging”—a practice of merchants of all shapes and stripes increasing the prices of their goods and services based on increased demands caused by the disaster.
Some Texas businesses, often hailed as the “friendly neighbor during good times, have shamefully exploited the “winter storm crisis” by engaging in the illegal practice of price gouging. It’s about profit before services.
These price increasing predators, however, should be aware that law enforcement (and the media) is taking hard looks at significant price increases for products and services put in greater demand by the winter storm crisis.
Learn more here about price gouging laws in Texas, and how to determine where the line is drawn when it comes to pricing your inventory.
What Texas Law Says About Price Gouging
Price gouging laws were put into effect to help protect consumers. Under Texas’s Deceptive Trade Practices Consumer Protection Act, price gouging is defined as taking advantage of a state or federal disaster by either:
- Leasing or selling food, lodging, construction tools, medicine, fuel, or other necessities at excessive or exorbitant prices
- Demanding an excessive or exorbitant price in connection with food, lodging, construction tools, medicine, fuel, or other necessities
When Does Increasing Prices Cross the Line?
The law does not expressly prohibit the increase in prices for certain necessities in the wake of disaster but it does prohibit excessively charging or increasing prices to an exorbitant amount.
The rule of measure is pricing that goes beyond what is “customary and reasonable.
So, what does that mean?
In this state, it’s really at the court’s discretion.
Unlike states that have outlined exact percentages — 20 or 25 percent price hikes — Texas law offers no real guidelines.
That said, it should be understood that sharp increases in prices for products and services during a designated disaster period may be considered price gouging, and should anyone report it, the predatory merchant could face legal trouble.
What To Do If Your Texas Business Is Accused of Price Gouging
If any of your customers suspect price gouging is occurring, there are some things the Texas Attorney General is suggesting they do right now.
Their first bit of advice is to try and speak with the business directly. It is preferable that a small business owner to try to resolve price gouging concerns in their early stages. If possible, it is always better to reduce pricing during a crisis than it is to increase pricing.
The main thing is not ignore or take lightly price gouging concerns. D not ignore emails or voicemails expressing concerns about price-gouging. Address them head-on. See what can done to ease customer concerns.
Finally, the offices of the Texas Attorney General actually has a dedicated process for reporting price gouging, and if a merchant ends up on that list, there will be, more likely than not, legal consequences.
The Consequences of Price Gouging
While price gouging is not a criminal offense, it is a deceptive practice the Attorney General investigates and enforces.
Consequences can include having to pay customers back and/or the imposition of civil penalties such as fines that can often reach hundreds of thousands of dollars per violation. Not to mention the potential PR nightmare of landing on the evening news.
If a business survived the 2020 pandemic, and somehow managed to survive the winter storm of 2021, it would be potentially devastating to try to recover financial losses through price gouging in the wake of those two disasters.
For those business owners already facing accusations that weren’t able to be resolved inside the store, reach out to an experienced Texas fraud attorney for advice. Swift action is essential to quelling any bad publicity — especially after the challenges they have surely faced in the last year or so.