Orlando, Fla.— As a responsible business owner, you must know local regulations such as the Florida Statute 501.160 which states that during a state of emergency, it is unlawful to sell, lease, offer to sell, or offer for lease essential commodities, dwelling units, or self-storage facilities for an amount that grossly exceeds the average price for that commodity during the 30 days before the declaration of the state of emergency, unless the seller can justify the price by showing increases in its prices or market trends. Examples of necessary commodities are food, ice, gas, and lumber, as per the Attorney General’s Office.
Florida’s Attorney General is the government official designated to safeguard consumers issues, and provides solutions to prevent abuse, especially during tough times like a storm or hurricane.
This office reported the following complaints from consumers following the State of Emergency Declaration during Dorian:
· 2,994 reports regarding alleged price gouging received by Consumer Protection investigators;
· Hundreds of reports remain under review and multiple complaints are being investigated;
· More than 180 store visits by the Attorney General’s Rapid Response Team;
· 705 reports through the app NO SCAM;
· Approximately $1,200 in refunds, credits or adjustments obtained so far and more recoveries expected as investigative efforts continue; and
· More than 80 percent of reports concern fuel or water.
Under Florida’s price gouging law, violators can face civil penalties of up to $1,000 per violation and a total of up to $25,000 in fines for multiple violations within a 24-hour period. Under state law, it is also a 2nd-degree misdemeanor to sell goods and serves to the public without a business tax receipt. The law only applies in counties under a State of Emergency Declaration.
However, every economist would tell politicians that while some people will benefit from anti-price gouging laws, other people may suffer because of them. That is because holding prices lower than it would take to balance supply and demand, will result in benefit of some who will buy products in short supply getting a better price than they would have without the anti-price gouging law. As we know, holding prices lower than the market clearing price means that supply will run out and some consumers will not have the chance to get any.
If your business sells a product that could be subject to price controls in an emergency situation, you need to determine your options before disaster strikes. Check the laws in the state where you live. If a state of emergency is declared, you will be restricted in how much you can raise prices for your products. If you raise your prices too high, you will risk a consumer backlash when the emergency passes. Consider running your own rationing system. For example, a gas station operator can restrict purchases to $10 per customer. The lumber company can limit plywood purchases to a specific number of sheets. It may cost you short-run profit, but the goodwill generated will keep your customers coming back in the long run.
Many shortages caused by natural disasters are not structural shortages caused by lack of capacity in the supply chain, but panic-induced shortages similar to bank runs caused by fear of future shortages and a resulting desire to hoard.
At Garzor Insurance, our courteous, and knowledgeable local Agents will assist you finding the best insurance prices available in the market choosing from multiple carriers, allowing you to compare and get the coverage that best suits your business’ needs.
Mariana Zorrilla, CIC, CRIS, CPIA