Legislature narrows state ban on price gouging during an emergency

The bill increases some thresholds for violating the state’s price gouging act, creates new ‘hurdles’ for investigating claims.

The Utah House of Representatives gave final approval Thursday to a bill that would raise the bar for what’s considered price gouging during an emergency.

The proposal comes after lawmakers said they found problems with the state’s current price gouging act during the coronavirus pandemic, which in its early days disrupted supply chains and left store shelves empty. Nearly 1,000 Utahns filed complaints to the state alleging businesses had charged them higher-than-average costs for everything from toilet paper to hand sanitizer and food staples.

Rep. Rex Shipp, R-Cedar City and the bill’s House sponsor, said Thursday that he decided to run the bill after constituents of his were contacted by the Division of Consumer Protection for violating the price gouging act as they sold food online that was left over when Las Vegas casinos shut down.

That problem came, he said, because current state code doesn’t take into consideration the price of obtaining a good or service — such as shipping costs — in the markup a seller can charge.

“And of course when you’re selling online and shipping it everywhere, shipping really needs to be a part of your acquisition costs, right?” he said Thursday. “So the bill makes this change. It changes the definition of margin and cost to account for the fact that obtaining an item may be much more than what’s paid for the item. Considerations includes transportation and shipping and getting the product and selling it.”

The bill also increases some of the thresholds under which someone would violate the price gouging act during a declared emergency — including by allowing anyone who had not previously sold a good or service prior to an emergency to charge twice their total cost of obtaining a product, up from 30% in current code.

There would also be new “hurdles,” as Shipp described them, for what claims the Department of Consumer Protection could investigate. The office would be required to weigh the gravity of harm to consumers, for example, among other considerations in determining which cases to pursue.

“They don’t need to automatically investigate every claim they receive,” Shipp said, noting that that language came in consultation with the department. “They receive thousands of claims of price gouging and so they don’t have to investigate every claim; they can pick the ones that are of most significance.”

Once an inquiry is underway, the bill would prohibit the office from releasing the name of a person or company under investigation and require that there be “clear and convincing evidence” that someone violated the act before a citation can become final.

Shipp said Thursday that he thought it was “important that we have price controls during emergencies.” But he added that he believes in the free market and that people “need to make a fair return on their products.”

“If you read the bill, it gives substantial opportunity for additional profit in the process,” he added.

SB86 received a unanimous vote in the House without debate and now moves to the governor for his signature or veto.

Lawmakers also considered a bill in this year’s legislative session that sought to abolish the state’s price gouging protections altogether. That proposal stalled in a Senate committee early on and never advanced.