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FRIDAY, JUNE 26, 2020

THE CITY RECORD

The Department is now adding a new permanent rule declaring as unconscionable the practice of price gouging goods and services that are essential to health, safety and welfare, or are marketed or advertised as being essential to health, safety and welfare during a declared State of Emergency in the City of New York.
New York City Administrative Code 20-701b permits DCA to declare as unconscionable:
Any act or practice in connection with the sale, lease, rental or loan or in connection with the offering for sale, lease, rental or loan of any consumer goods or services, or in the extension of consumer credit, or in the collection of consumer debts which unfairly takes advantage of the lack of knowledge, ability, experience or capacity of a consumer; or results in a gross disparity between the value received by a consumer and the price paid, to the consumers detriment.
Price gouging occurs when a merchant takes advantage of an abnormal disruption in the marketplace and charges excessive prices, taking advantage of the consumers inability to bargain or seek a better price, resulting in a gross disparity between the value received by a consumer and the price paid. Such marketplace disruptions often occur during a State of Emergency. This rule assists in protecting consumers when they are at their most vulnerable.
The permanent rule declares price gouging conduct unconscionable and aligns New York City with many jurisdictions across the country that prohibit price gouging in emergency circumstances, including New York State. The rule includes an illustrative list of goods that are essential to health, safety or welfare, and could therefore be subject to price gouging. The rule also establishes a threshold for prohibited pricing of ten percent above the price at which consumers in New York City could obtain such goods or services 30 to 60 days prior to the declaration of a State of Emergency in the City of New York. This is similar to the standard used by several other jurisdictions, including the states of New Jersey and California, in laws that prohibit price gouging.
To ensure that no merchant is penalized unfairly, the permanent rule provides a defense if the merchant can show that the price increase was directly attributable to additional costs imposed on it by the supplier of the goods, or directly attributable to additional costs for labor or materials used to provide the services. The permanent rule further provides an exemption for merchants who did not exploit the State of Emergency and charged the same price both 30 days prior to the declaration of a State of Emergency and during that State of Emergency.
The Emergency Rule added an entry for the new price gouging prohibition to the penalty schedule for consumer protection law violations found in section 6-47 of subchapter B of chapter 6 of title 6 of the Rules of the City of New York. This entry is included in the permanent rule.
New material is underlined.
Deleted material is in brackets.
Shall and must denote mandatory requirements and may be used interchangeably in the rules of the Department, unless otherwise specified or unless the context clearly indicates otherwise.
Rule Amendment Section 1. Part 4 of subchapter A of chapter 5 of Title 6 of the Rules of the City of New York is amended by adding a new section 5-42, to read as follows:
5-42 Unlawful Price Gouging.
a Definitions.
Covered goods or services. The term covered goods or services means goods or services that are essential to health, safety or welfare, or are marketed or advertised as such, including but not limited to
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staple consumer food items such as milk, eggs and bread, goods or services used for emergency cleanup, or emergency supplies such as water, flashlights, radios, batteries, candles, blankets, soaps, diapers, toiletries, medical supplies such as medications, bandages, gauze, isopropyl alcohol, medical masks, and antibacterial products,or gasoline or other motor fuels.
Excessive price. The term excessive price means 10 percent or more above the price at which the same or similar good or service could have been obtained by a buyer in the City of New York 30-60 days prior to the declaration of a state of emergency.
Merchant. The term merchant means a seller, lessor, or creditor or any other person who makes available either directly or indirectly, goods, services or credit, to consumers. Merchant includes manufacturers, wholesalers and others who are responsible for any act or practice prohibited by this subchapter.
b1 It is an unconscionable trade practice for a merchant to sell or offer for sale covered goods or services at an excessive price during a declared state of emergency in the City of New York.
2 Exceptions. A merchant is permitted to sell or offer for sale covered goods or services at an excessive price if such merchant:
i has increased its price of such goods or services to an excessive price as a direct result of costs imposed on such merchant by the supplier of such goods or services, or such increase in the price of such goods or services is directly attributable to additional costs for labor or materials used to provide the goods or services, provided that the increase charged to the buyer is comparable to the increase incurred by the merchant; or ii sold or offered for sale such covered goods or services to buyers in the City of New York at an excessive price 30 days prior to the declaration of a state of emergency and such merchant has not increased the price of such goods or services during the state of emergency, or in the 30 days prior to such declaration, except in accordance with subdivision i.
3 Each sale or offer for sale in violation of this rule constitutes a separate violation.
Section 2. Section 6-47 of subchapter B of chapter 6 of Title 6 of the Rules of the City of New York is amended, to read as follows:
6-47 Consumer Protection Law Penalty Schedule.
All citations are to Title 20 of the Administrative Code of the City of New York or Title 6 of the Rules of the City of New York.
Unless otherwise specified, the penalties set forth for each section of law or rule shall also apply to all subdivisions, paragraphs, subparagraphs, clauses, items, or any other provision contained therein. Each subdivision, paragraph, subparagraph, clause, item, or other provision charged in the Notice of Violation shall constitute a separate violation of the law or rule.
For the fine amounts marked by a single asterisk, if the respondent timely submits the appropriate proof of having cured a first-time violation, the respondent will not be subject to a civil penalty pursuant to Local Law 153 of 2013.
Pursuant to Section 20-703b of the Administrative Code of the City of New York, the knowing violation of any provision of subchapter 1
of chapter 5 of title 20 of the Administrative Code of the City of New York or of any rule promulgated thereunder is subject to a maximum penalty of $500.
Unless otherwise specified by law, a second or third or subsequent violation means a violation by the same respondent, whether by pleading guilty, being found guilty in a decision, or entering into a settlement agreement for violating the same provision of law or rule, within two years of the prior violations.

Citation
Violation Description
First Violation
First Default
Second Violation
Second Default
Third and Subsequent Violation
Third and Subsequent Default
Admin Code 20-700

Engaged in an unlawful deceptive or unconscionable trade practice
$260

$350

$315

$350

$350

$350

6 RCNY 5-23

Failure to meet the requirements for layaway plans
$260

$350

$315

$350

$350

$350

6 RCNY 5-24

Failure to meet requirements for credit card limitations
$260

$350

$315

$350

$350

$350

6 RCNY 5-32

Failure to meet the requirements for documentation of transactions
$260

$350

$315

$350

$350

$350

6 RCNY 5-36

Failure to meet the requirements for sale of used items
$260

$350

$315

$350

$350

$350

6 RCNY 5-37

Failure to comply with disclosure of refund policy requirements
$260

$350

$315

$350

$350

$350

6 RCNY 5-39

Failure to meet the requirements for cancellation of home appointment
$260

$350

$315

$350

$350

$350