New Jersey's Emergency Pricing Law Triggered by the COVID-19 Crisis Requires Clarity
Last updated April 14, 2020
New Jersey’s emergency pricing law, N.J.S.A. 56:8-107-109, is intended to preclude opportunistic sellers and merchants from price-gouging during a crisis. Specifically, the law prohibits a seller from charging prices that are more than 10% higher than the price at which the good or service was offered prior to a state of emergency unless the increased price is attributable to additional costs imposed upon the seller during the state of emergency. The law applies to a broad array of products and services; namely, any merchandise which is consumed or used as a direct result of an emergency or which is consumed or used to preserve, protect, or sustain the life, health, safety or comfort of persons or their property. As a result, while most obviously applied under current circumstances to Personal Protective Equipment and other healthcare supplies as well as basic essentials such as food and clothing, the statute can be read so as to cover virtually all goods and services.
Violations of the statute are punishable by civil penalties of $10,000 for the first offense and $20,000 for the second and subsequent offenses. Violators can also be required to pay restitution, attorneys’ fees and investigative costs.
The law was triggered when Governor Murphy declared a state of emergency on March 9, 2020, and both he and Attorney General Gurbir Grewal have issued public statements to the effect that their offices have already received hundreds of complaints and the law will be fully enforced. While that may be the case, the scope of the law is somewhat vague, as it was intended to apply to temporary emergencies, like Hurricane Sandy, not a crisis of the likely duration or scope of the current COVID-19 pandemic. As a result, lawyers throughout the State, including former government officials, have been asking that the Attorney General’s Office and Division of Consumer Affairs provide guidance as to when and under what circumstances the law would apply.
Such guidance is especially needed in light of the full or partial shutdown of many businesses. Under the current circumstances, it is critical for businesses to know whether they can adjust prices based on seasonal pricing, remove already existing discounts or sales prices or what “additional costs” arising from the emergency they can pass on to consumers. Surely the State cannot expect sellers and merchants to sell their products or services at a loss or freeze their prices in a manner that would require the sellers to fire employees or close their doors. One would hope that in enforcing the law the State would consider workers and employees as potential “additional costs” justifying a reasonable price increase under the statute as long as there is adequate supporting documentation.
In short, the emergency pricing law, N.J.S.A. 56:8-107-109, should be viewed from this perspective, and used to prosecute true profit-gouging, and not as a means to go after business owners making good faith price adjustments to pay their overhead, maintain employees and stay afloat. Under the unique circumstances the COVID-19 emergency presents, businesses and their owners need clarity from the State to make sure the emergency pricing law is enforced in a manner that maintains this distinction.
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