How to Protect Yourself: Price-Gouging After a HurricaneSource: The Florida Attorney General's Office
Price Gouging After a Hurricane
The victims of any natural disaster, be it a hurricane, flood or earthquake, have unfortunately become victims of scam artists out to profit from the misery of others. Below is some information on how to protect yourself from becoming a further victim after an initial disaster strikes.
Following Hurricane Andrew in 1992, the State of Florida enacted a law that prohibits "price gouging" after a declared state of emergency.
The law bans unconscionable increases in prices in the rental or sale of essential commodities, which would include lumber, ice, water, chemicals, generators, shelter and other necessary goods and services once a state of emergency has been declared by the governor. It is also unlawful to raise hotel rental rates or housing lease rates under Florida’s price gouging laws. Other states may have similar laws, which also impose penalties on violators.
The Florida Office of the Attorney General investigates every allegation of price gouging. The law requires us to compare the reported price of the commodity or service during the declared state of emergency to the average price charged over the 30-day period prior to the state of emergency. If there is a “gross disparity” between the prior price and the current charge, it is considered price gouging. It is not considered price gouging if the seller can justify the price by showing an increase in the price of their supplies or market trends. Additionally, the price gouging statute does not apply to non-essential luxury goods like alcoholic beverages and cigarettes.
Violators of the price gouging statute are subject to civil penalties of $1,000 per violation and up to a total of $25,000 for multiple violations committed in a single 24-hour period. In addition to the civil penalties for price gouging, state law criminalizes the sale of goods and services to the public without possession of an occupational license. Violators of the law can be charged with a second-degree misdemeanor.
Following a disaster, qualified contractors are in high demand, making conditions ideal for scam artists.
If your home is damaged, be sure to follow these tips when hiring a contractor:
- Be wary of anyone who approaches you unsolicited or says they can perform your repairs at a discount with leftover supplies from another job.
- Have your insurance company evaluate the damage before arranging repairs to ensure that the work will be covered under your policy.
- Get at least three written, itemized estimates or bids on repairs.
- Verify that the contractor has a license from the Department of Business & Professional Regulation (DBPR) or your county construction licensing board. A licensed contractor can be looked up and verified on the DPBR website (www.MyFloridaLicense.com).
- Research the company and its reputation – ask for references. In addition to DPBR, you may also contact the Attorney General’s hotline (1-866-9-NO-SCAM) and the Better Business Bureau (www.bbb.org) to see if there are complaints against the company.
- Check for proof of insurance and verify with the insurer that their policy is current.
- Check to see if the contractor is bonded and verify with the bonding agency.
- Never pay the full amount of a repair up front and hesitate before providing large deposits. Florida law requires a contractor to apply for a permit within 30 days and start work within 90 days if he collects more than 10 percent of the contract up front.
- Read the entire contract, including the fine print, before signing and ensure that the contract includes the required “buyer’s right to cancel” (within 3 days) language.
- Homeowners may unknowingly have liens placed against their properties by suppliers or subcontractors who have not been paid by the contractor. If the contractor fails to pay them, the liens will remain on the title. Insist on releases of any liens that could be placed on the property from all subcontractors prior to making final payments.
- Do not sign a certificate of completion or make final payment until you are satisfied with the work performed.
Only do business with reputable contractors and businessmen.
Someone selling generators off of a truck on the corner may have stolen them, or they may be inoperable. Someone driving through a neighborhood offering to patch roofs or remove fallen trees may never be seen again after he collects the deposit or payment.
File a complaint.
Report an instance of price gouging or contractor fraud during a declared state of emergency to the Attorney General’s Office online at www.myfloridalegal.com or by calling toll-free at 1-866-9-NO-SCAM. Additionally, you may report unlicensed contractors to the Department of Business & Professional Regulation online at www.myfloridalicense.com or by calling 1-866-532-1440.