A bill to combat price gouging in the State of California has moved forward after a 5-0 vote in Senate Public Safety Committee.
Introduced in April by Senator Thomas J. Umberg (D-Santa Ana) and Co-Authored by Senator Ling Ling Chang (R-Diamond Bar) aims to combat price gouging in the State of California during a declared state of emergency.
The bill was in response to the COVID-19 pandemic where there were many individuals using the crisis as an opportunity to turn a profit on essential goods. Senate Bill 1196 (SB 1196) will tighten California law to assist law enforcement officials in prosecuting instances of price gouging that are committed by new sellers during an emergency.
Currently, under California Penal Code Section 396, price gouging is illegal and punishable by law during a declared state of emergency. However, the code hasn’t been revisited since 1992, and it’s time to bring it up to speed to modern-day standards and to reflect current market technologies. For example, Penal Code Section 396 dictates that a seller has committed price gouging when they charge “a price of more than 10 percent greater than the price charged by that person for those goods or services immediately prior to the proclamation or declaration or emergency.” This section clearly prevents established sellers of specified goods from committing price gouging, but is silent to new sellers in a market place.
This bill would expand that crime to also include selling or offering to sell those goods or services for a price 10% greater than the price charged immediately prior to a date set by the proclamation or declaration of emergency. The bill would also make it a crime for a person, contractor, business, or other entity who did not charge a price for the goods or services immediately prior to the proclamation or declaration of emergency to charge a price that is more than 50% greater than either the amount that the seller paid for the goods or, if the seller did not purchase the goods, the seller’s costs in selling or providing the goods or services. The bill would authorize the Governor or the Legislature to extend the duration of these prohibitions for periods greater than 30 days. This bill would make those crimes punishable as a misdemeanor or a felony. By expanding the scope of a crime, this bill would create a state-mandated local program.
