Current Events in September 2001

Sept. 14, 2001

Several state attorneys general say they're investigating reports of price-gouging by gas stations following the East Coast terrorist attack. In Mississippi, Atty. Gen. Mike Moore said he expects to "make some arrests."

Wholesale gas prices jumped 5 to 15 cents a gallon Tuesday afternoon in the hours following the attacks as refineries, distribution terminals and ports closed for security reasons. But wholesale prices dropped again Wednesday as the facilities reopened.

Spokesmen for the petroleum industry and various trade groups said there was no reason for a spike in retail prices and denounced the increases as unjustified.

Perhaps so, but for at least a few hours prices in many areas skyrocketed.

Moore's office reported receiving more than 2,000 complaints of prices as high as $5 per gallon Tuesday and Wednesday. In Ohio, there were reports of $6 per gallon prices.

The national average gas price was $1.54 before the attack on Monday.

Any prosecutions by the attorneys general would be under statutes or executive directives that ban profiteering and "unconscionable" price increases during times of emergency.

Texas Attorney General John Cornyn today announced the filing of an assurance of voluntary compliance in Dallas County District Court with Royal Prestige of Texas, Inc., and company president Bruce Herron. The enforcement measure is designed to reimburse consumers who were charged unauthorized fees to claim vacations or were misled about financing terms. Consumers must request a refund in writing.

The Addison-based company uses gift giveaways and drawings for free vacations and other prizes to entice consumers to attend a 90-minute sales presentation on cookware and other household products.

The state alleges that Royal Prestige of Texas, Inc., and Herron individually, violated the Deceptive Trade Practices and Consumer Protection Act and the Contest and Gift Giveaway Act by charging an unauthorized $9.95 "processing and handling" fee to redeem prizes or gifts; requiring that consumers purchase airfare at up to $1,200 as a condition of receiving hotel accommodations given as prizes; and failing to disclose that airfare was not included in vacations and honeymoons offered as gifts and prizes.

The Attorney General's Office also alleges that consumers were misled that the cookware or household products would be shipped within 30 days after making a down payment, only to learn later that they were required to make up to six monthly payments before the purchased product would be shipped. Royal Prestige of Texas, Inc. and Herron deny these allegations but have agreed to resolve this matter voluntarily.

The assurance requires the payment of restitution to consumers who request a refund in writing, and requires the payment of $19,000 to the state as attorney's fees and investigative costs. The assurance prohibits the company from engaging in certain conduct, including but not limited to, the following:

• Charging a "processing and handling" fee as a condition of receiving a redeemable certificate to claim a gift or prize;
• Requiring a person to purchase airfare or lodging to receive a trip as a prize;
• Failing to disclose that airfare or lodging is not included in a trip offered as a gift or prize;
• Misrepresenting that a consumer has a three-day right to cancel, if they do not;
• Failing to provide written disclosures regarding the number of monthly payments a consumer must make before the merchandise will be shipped; and
• Failing to keep contest and drawing records as required by the CGGA.

Provided by the Texas Attorney General's office