Through a series of settlements with businesses and individuals accused of price gouging, the Utah Division of Consumer Protection has ordered the return of more than $13,000 to consumers who paid higher-than-normal prices for goods during the early days of the coronavirus pandemic.
The state has so far received 933 complaints alleging steep prices for everything from medical goods and grocery staples to gaming systems and bottled water.
Some of those investigations are ongoing, but the division has issued seven citations for price gouging. One of those is pending, and the rest have been settled with the agreement that the alleged price gougers return their “ill-gotten gains” back to consumers.
The total amount each was asked to return ranged widely. An Ogden man who allegedly sold a few N95 respirator masks at a cost of $13.50 more for each than the law would allow was asked to give back $40.50 to those who had purchased at the higher prices. Near the other end of the spectrum, a Cedar City company that also sold masks agreed to reimburse 852 customers for a total $3,766.10 in earnings that were made in apparent violation of the state’s price gouging statute.
That business, PlumbersStock.com, also agreed to pay a $376.61 fine as part of its settlement.
Another company that entered into a settlement agreement with the state is Culinary Crafts Catering, a Pleasant Grove business that does not typically sell flour but began selling 25-pound bags during the COVID-19 pandemic. The cost to the company of obtaining each bag was $9.22 and it could have sold them lawfully for a price of $11.99 each, the state alleged in its citation.
Instead, the catering company sold 221 bags to consumers at an average price of $23.04 per bag, resulting in nearly $2,500 in unlawful gains, the division said. As part of its settlement, the state required Culinary Crafts to return that money to its customers and pay a $244 fine.
While the state prioritizes returning money to the consumers who were gouged, there are instances when the identity of a consumer “cannot be reasonably obtained.” In those cases, the division has instructed individuals and businesses to return the funds to the state to deposit into its Consumer Protection Education and Training Fund.
Brian Maxwell, a spokesman for the Utah Department of Commerce, said the Division of Consumer Protection is still accepting price gouging complaints, since Utah remains in a state of emergency over the coronavirus pandemic. But he said the number of reported cases has “slowed significantly.”
At first, “it was like a deluge,” he said, with more than 650 of the total complaints coming in during the first four weeks after the governor declared an emergency on March 6.
Just under 190 came in during the next four weeks, and from that time to now, only 90 complaints have come in.
The state’s law applies only to goods or services that are deemed “necessary for consumption or use as a direct result of events giving rise to a state of emergency.” The statue doesn’t define what is “necessary,” so it’s up to a judge to decide.
As Consumer Protection considers complaints to determine whether a company or individual has violated the statute, it can’t look solely at a listed price. Instead, investigators find baseline costs to compare the price to — including whether the seller sold the good or service in the 30 days before the emergency and at what cost and whether there were wholesale price increases in the cost of obtaining the good or providing the service.
Each violation carries a maximum potential fine of $1,000.
The coronavirus pandemic has offered the first test of the state’s price gouging statute, which passed into law in 2005, and investigators have identified some needed tweaks and updates to the law as they’ve looked into cases.
For example, Rep. Patrice Arent, D-Millcreek, told a legislative committee last month that “we didn’t anticipate online sales through KSL.com or Amazon” when she sponsored the bill in the Senate all those years ago.
While the division currently interprets the price gouging law as applying equally to traditional retailers and individuals selling goods online to consumers, that’s one of a “number of clarifications” needed to update the act, Arent argued.
Other policy considerations the Division of Consumer Protection has asked the Legislature to consider is further defining what goods and services are covered under the statute and clarifying whether an advertisement or offer is covered under the law, even before a sale has been completed.
Sen. Lincoln Fillmore, R-South Jordan, has opened a bill file in next year’s legislative session to address the issue. Arent is retiring at the end of her current term.