Nov. 9, 2012 at 12:18 PM ET
New Jersey has filed lawsuits against eight businesses for allegedly gouging customers with exorbitant prices in the days after Superstorm Sandy roared ashore, the state's attorney general said Friday.
The defendants, seven gas stations and a hotel, are accused of hiking their prices from 11 to 59 percent in the days after the storm. One gas station was charging as much as $5.50 a gallon, Attorney General Jeffrey S. Chiesa said. The hotel, a Howard Johnson Express in Parsippany, N.J., allegedly raised its room rates to $119 after the storm, up 32 percent from the top rate of $90 just prior to the storm.
“We have received no indication that these defendants faced costs that would have made these excessive price increases necessary or justifiable. One gas station even paid less per gallon for a shipment of fuel after the storm than it had paid before the storm,” Chiesa said in a statement.
The lawsuits come as residents of New York and New Jersey continue to struggle with a gasoline shortage that has led to long lines and short tempers. On Thursday, New York City and Long Island joined New Jersey as areas where odd-even gas rationing is in effect. Drivers in the affected areas can only fill up on designated days, depending on their license plate numbers.
New Jersey’s anti-gouging law prohibits price hikes of more than 10 percent in an emergency in most cases. The law does make an exception for merchants who face increased costs, but the markup is still limited to 10 percent above normal levels, according to the state attorney general’s office.
New Jersey has received about 2,000 consumer complaints about gouging since a state of emergency was declared Oct. 27, and has issued 170 subpoenas to merchants, according to Eric T. Kanefsky, acting director of the state division of consumer affairs.
The defendants face fines of up to $10,000 for their first offenses and $10,000 for subsequent offenses. Each sale is considered a separate offense. Prosecutors estimate that the gas station charging $5.50 for regular-grade gas made 230 sales on Nov.1, when the state of emergency was in effect.
On Monday, New York’s Attorney General Eric T. Schneiderman said New York had “zero tolerance” for price-gouging and announced that his office was investigating “hundreds of complaints from consumers” in New York City, the Hudson Valley and on Long Island.
In New York, it is illegal to charge what the law defines as “unconscionably excessive price[s]” on essentials like food, water, gas, generators, batteries and flashlights, as well as services like transportation.
The combination of pipeline and port closures has contributed to a supply squeeze, and widespread power outages have prevented many gas stations from opening. Meanwhile millions of people have turned to generators to power their homes, adding to the demand.
Some 28 percent of gas stations in the New York metropolitan area did not have fuel available for sale on Thursday, down from 38 percent on Wednesday, the U.S. Energy Information Administration said on Friday
In announcing rationing, New York Mayor Michael Bloomberg said the shortages could last another couple of weeks.