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Md. bill to combat price gouging in state of emergency advances

Md. bill to combat price gouging in state of emergency advances

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Maryland businesses selling certain essential goods or services will be prohibited from raising their prices above 15% during a state of emergency if the General Assembly passes a proposal from Attorney General Anthony Brown before the end of the legislative session in a few weeks.

Each chamber has already passed a version of the bill. The Senate Finance Committee on Thursday voted to send a version of the bill from the House of Delegates, HB 775, to the Senate floor for a vote.

The Senate voted 36-9 to pass an identical version of the bill on Friday of last week.

In March 2020, Republican Gov. Larry Hogan issued an executive order prohibiting businesses selling essential goods or services from increasing their prices by more than 10%.

The executive order, which restricted price gouging for items like food, medicine, child care and car parts, expired in 2021.

“When our Consumer Protection Division receives complaints about price gouging, it often happens in really dire situations, like the pandemic, like perceived crises or shortages,” Brown, a Democrat, said during a bill hearing in February.

The state’s Consumer Protection Division mediates complaints against businesses and health insurance carriers, according to its website.

The division, though, cannot assist people who file complaints about price gouging following a storm or other large-scale emergency because Maryland doesn’t have a law against price gouging, a letter in support of the bill from the Consumer Protection Division states.

Brown’s proposal would prohibit businesses from raising above 15% the price for goods or services that the governor deems essential, unless the business can justify an increase above that threshold.

Marceline White, executive director for Economic Action Maryland (formerly the Maryland Consumer Rights Coalition), wrote in a letter of support for the bill that the organization had received calls “during the COVID-19 pandemic” from families who were struggling financially and grappling with the increased costs of items like face masks, personal protective equipment, toilet paper and food.

“These costs created undue hardship for families that were already struggling financially and psychologically in the midst of an unprecedented crisis,” White wrote.

The Maryland Motor Truck Association, a nonprofit trade association that has represented members of the trucking industry since 1935, wrote in opposition to the attorney general’s proposal.

“During any emergency declaration, transportation is always included as essential because trucks are needed to deliver food, fuel, medicine, and other supplies as part of any relief efforts,” the Maryland Motor Truck Association’s letter reads.

Prices can fluctuate based on how quickly deliveries need to be made, the supply of drivers and the cost of gas, among other factors, the statement reads.

“The provisions of this bill are virtually impossible for a trucking company to comply with because, during a state of emergency, companies are frequently running irregular routes and providing spot transportation services as opposed to normal contracted deliveries,” the statement reads.

A letter from the Maryland Chamber of Commerce states that the attorney general’s bill doesn’t account for the flexibility that business and the government need to supply goods and services during times of emergency.

“Targeting and eliminating price gouging during times of uncertainty is a necessary function of government. However, an effective response requires flexibility and targeted enforcement, SB 542 does not provide either,” the chamber’s letter reads.

More than thirty states and Washington, D.C. have similar policies, including neighboring states Pennsylvania, Virginia and West Virginia, according to the Office of the Attorney General.

The state’s Consumer Protection Division, under the Office of the Attorney General, received 925 complaints between March 2020 and late February 2023, but complaints “dropped off significantly” after the immediate onset of the pandemic, said Assistant Attorney General Shelly Martin, who coordinated much of the office’s enforcement against price gouging.

“Price gouging was happening, but most of it was happening further back in the supply chain,” Martin said.

To sell their products, retailers paid “outrageous price increases” for supplies and then passed that increase to consumers, Martin said.

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