Price gouging during disasters could become a crime

Minnesota could join 35 others states and Washington D.C. in making price gouging during disasters and emergencies illegal.

Sponsored by Rep. Zack Stephenson (DFL-Coon Rapids), HF844, as amended, would prohibit retailers from increasing the prices of essential goods and services by more than 30% during, and for 30 days after, a public emergency is declared by the governor.

The bill was approved 8-7, along party lines, by the House Commerce Finance and Policy Committee Friday. It now heads to the House Floor. The companion, SF965, awaits action by the Senate Commerce and Consumer Protection Finance and Policy Committee. Sen. Lindsey Port (DFL-Burnsville) is the sponsor.

Consumers nationally have seen price spikes during the COVID-19 pandemic, and more recently as a result of weather-related disasters. While much of that can be attributed to fluctuations in supply chains, there may be instances in which sellers are profiting off of the disasters, Stephenson said.

Gov. Tim Walz signed an executive order prohibiting the practice during the pandemic, but there isn’t a state law that would allow residents to seek restitution for price gouging during future disasters. The bill aims to change that, Stephenson said.

It would outline what’s permissible and impermissible pricing behavior during an emergency and allow violators be fined up to $10,000 per day.

“I really believe that the vast majority of businesses in Minnesota would never engage in this kind of behavior,” he said. “But the fact that a few people in Minnesota would price gouge doesn’t mean that there shouldn’t be accountability for those that do.”

Jamie Pfuhl, president of the Minnesota Grocers Association, said an unintended consequence of the anti-price gouging executive order has been an “exhaustive amount of paperwork,” needed in order to prove price spikes have been the result of increasing wholesale costs and not profiteering. She opposes the proposal, saying it would continue to put an undue burden on many retailers.

Rep. Jordan Rasmusson (R-Fergus Falls) also opposes the bill, saying that pricing can be a useful tool to prevent hoarding behavior. “I worry this will prevent retailers and others in the supply chain from taking smart action that actually helps ensure that there is toilet paper and water bottles on the shelves and gasoline at gas stations,” he said.

Stephenson referenced a safe harbor component in the bill that’s geared toward alleviating some of the burden on businesses, and disagreed with the suggestion that price increases should be used to manage supplies.

“The idea that people who have means should be able to have greater access to goods and services during an emergency than people without, I just take strong exception to that,” he said.