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January 22, 2010

Price-Gouging Rule in Effect in Storm-Damaged Counties

Consumer and Law Enforcement Bulletin -- January 22, 2010

The State's anti-price-gouging rule is in effect in counties where disaster emergency proclamations have been issued in the wake of Iowa’s winter storms. In late December and this week, Gov. Culver issued emergency proclamations for the following counties: Adair, Audubon, Carroll, Cass, Clarke, Crawford, Harrison, Mills, Monona, Montgomery, Page, Pottawattamie, Sac, Shelby and Taylor. [Calhoun County was added on January 24th.] [Cherokee and Guthrie were added on February 4th.]

Price gouging is the practice of taking advantage of disaster victims by substantially raising the prices, without justification, for needed goods or services. Price gouging is considered an unfair practice under the Iowa Consumer Fraud Act when a disaster declaration is in effect for a county. The Attorney General's Administrative Rules describe the practice as raising prices unreasonably above the price at which the merchandise or service was sold in the usual course of business immediately prior to the onset of the emergency. (The rule recognizes the fact that prices sometimes may be higher because sellers also often incur increased costs.) The rule applies during the emergency declaration and "subsequent recovery period" up to six months.

The price-gouging rule -- which was adopted at the time of 1993's widespread floods -- covers but is not limited to water, food, medicines, sanitation supplies, utilities, and materials, goods, or services for clean-up or repair. Unconscionable price gouging might include unjustified high prices for generators, materials or supplies that victims of storm damage may have little choice but to buy. In 1993, for example, there were price gouging allegations in the rental of "porta-potties" and the sale of bottled water.

Complaints about possible price gouging may be brought to local authorities or to the Attorney General's Office -- 515-281-5926, or toll-free at 888-777-4590.

For more information on avoiding scams that tend to hit in the wake of storms or floods, please see the Attorney General's web site: (Click on “Consumer Advisory” bulletins for storms and natural disasters.)

(For more information: Bob Brammer, 515-281-6699.)

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