Attorneys general from more than a dozen states are calling on Congress to make price gouging illegal.
A federal law against price gouging would outlaw companies raising prices to boost their profits during crisises such as natural disasters and pandemics, the attorneys general said Wednesday.
Already, 40 states have laws that make price gouging illegal but those laws aren't doing enough, the attorneys general said.
"Despite that consensus, there is currently no federal price gouging prohibition—and individual states face heightened challenges when protecting consumers from price gouging when so many product supply chains are nationwide," the attorneys said.
"Without a federal prohibition, however, consumer-facing retailers—often small businesses—bear the brunt of the reputational and legal consequences of crisis-induced higher prices, even when the most significant price gouging activity may be happening up the supply chain—outside the jurisdictional reach of a particular state’s price gouging enforcement," they added.
Sixteen attorneys general signed the letter to Congressional leaders, including from California, New York, Pennsylvania and Michigan.
What is price gouging?
Price gouging is when companies quickly raise costs more than needed to increase their profits and take advantage of people who have no other choice than to pay up.
Concerns about price gouging on household items rose following supply-chain disruptions from the pandemic, which spurred the highest inflation since 1981.
"Our states saw this up close as we received complaint after complaint from consumers about price gouging during the COVID-19 pandemic," the attorneys general said. "Those consumers were angry about retailers jacking up the price of essential goods like household disinfectants."
U.S. oil refineries present another example of price gouging, the attorneys general said.
Russia's invasion of Ukraine disrupted global markets for oil and diesel, but U.S. refiners didn't boost production enough to meet demand, which kept prices and profits high and gouged drivers at the pump, the attorneys general said.
How do laws against price gouging work?
Laws against price gouging don't involve capping prices, such as those placed on gasoline in the 1970s and 1980s.
Instead, the laws require that companies can't raise prices on essential goods and services to boost their profits during a crisis, such as a hurricane and supply chain disruption from worker strikes or wars.
Companies still can still raise prices on their goods and services to pay for additional costs, such as labor and raw materials.
The attorneys general said a federal law against price gouging would pause price increases during a crisis, prevent pricing overreactions, prevent people from hoarding items and boost competition.