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New Jersey investigating reports of price gouging

by Bill Briggs /  / Updated 

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Cars line up for gas at the New Jersey Turnpike's Thomas A. Edison service area Wednesday, Oct. 31, 2012, near Woodbridge, N.J. After Monday's storm s...
Cars line up for gas on the New Jersey Turnpike Wednesday near Woodbridge, N.J. After Monday's storm surge from Sandy, many gas stations in the region are without power and those that are open have very long lines.Mel Evans / AP

Prices for gasoline, hotel rooms, electrical generators and other post-storm necessities have risen sharply from New York to West Virginia in the wake of Hurricane Sandy, and many residents are complaining of gouging.

In New Jersey alone, about 100 consumers have called the attorney general’s office to complain, said Neal Buccino, spokesman for the state’s Division of Consumer Affairs.

“Some gas stations have raised their prices by 20 to 30 percent in one day,” Buccino said. “Some hardware stores have doubled the price they charge for generators overnight.”

Those types of increases would appear to be illegal under New Jersey’s anti-gouging law, which prohibits price hikes of more than 10 percent in an emergency. The law does make an exception for merchants who face increased costs, but the markup is still limited to 10 percent above normal, according to the state attorney general’s office

"We will not hesitate to impose the strictest penalties on profiteers who, in direct violation of our consumer protection laws, seek to capitalize on the misfortune of others in the midst of a crisis and recovery period,” Gov. Chris Christie said, issuing his second warning in as many days on the issue.

The state has deployed teams of investigators to check out complaints against specific retailers.

Violations are punishable by $10,000 fines. At least one gas station operator paid $20,000 to settle gouging charges in New Jersey related to Tropical Storm Irene last year.

Rising gas prices were a special topic of interest to many residents, especially those depending on generator power, as lines grew long at many stations, raising concern about potential shortages.

In some cases, it was not immediately clear whether price increases were examples of illegal gouging or simply reflected the law of supply and demand.

One reader reported that the price of an economy car rental at Baltimore’s main airport jumped from $15 a day to $230 immediately before the storm, when flights were grounded up and down the East Coast. The higher rate reflected a one-way rental at a time when cars were almost certainly in very short supply.

NBC News staffers who booked hotel rooms in midtown Manhattan for $269 per night before the storm were informed Wednesday that the rate for the same rooms had increased to $679 per night. The rate seemed excessive, even though rates typically rise sharply ahead of the New York City Marathon, which is expected to go forward as planned this weekend. (The staffers later negotiated a corporate rate of $599.)

New York’s law on gouging is somewhat vague, forbidding sellers of “essential consumer goods and services from charging excessive prices during what is clearly an abnormal disruption of the market,” according to a statement from Attorney General Eric Schneiderman.

“While most vendors understand that customers are also neighbors, and would never think of taking advantage of others during such disruptive times, these circumstances always require an extra sense of vigilance and preparation,” Schneiderman said.

At one Sam's Club store in Manchester, Conn., some customers complained that generators priced at $349 two weeks ago suddenly cost $999 as the storm approached, said Laura Lavoie, a nearby resident who visited that store Sunday.

"People were buying them and complaining about it,” she said. “One guy stormed out while we were walking in. ... The guy said his wife wouldn't let him buy (the same generator) three weeks ago when it was $349 and now he can't afford to buy it.”

A spokesman for Wal-Mart, which owns Sam’s Club, said the store ran out of the lower-priced generator, a 3,600-watt model, and was forced to substitute the more expensive 7,000-watt unit.

“At no time did we raise the price of either model of generator in anticipation of, during, or following the storm,” said spokesman Mark Scott.

In the New York City borough of Queens, where the subway was out of order, reader Glenda Burgos told NBC News that cabs were charging $70 to $80 for a ride to Manhattan, about twice the usual rate.

At La Delice Pastry Shop on Manhattan’s east side, the price for a cup of coffee had been raised from $1 to $3, Reuters reported. A store clerk said the reason was that they had to use bottled water to make the coffee.

Other reports could not be verified, such as tales of D batteries being sold at $15 for a two-pack. With power still out to millions of homes and businesses, many merchants were accepting cash only, making reports of gouging even harder to prove.

In Brooklyn, where flood waters rose due to the hurricane, reader Danny Funaro reported that Polsteins Home Center was selling sandbags for $5 apiece, when, he said, a sandbag is "worth less than a dollar." At Polsteins, a clerk who spoke to NBC News said individual sandbags have long been priced at $5. 

Have you seen examples of price gouging? Send photos of price tags or receipts to Bill.Briggs@msnbc.com.

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