Petrogram - Fall 2008 - (Page 40)
FEATURE Price-Gouging Statute We Won’t Be Fooled Again By Geoffrey Schwartz The F or those of you that are either in denial or free-from-government-regulation Never-Never-Land, Florida does have a price-gouging statute. Mother Nature tricked the storm seers last year, so maybe the ins and outs of the price-gouging statute have receded in marketers’ minds, like some hairlines. But don’t you be the unfortunate one to get caught asleep at the wheel when both the winds and consumers start to rage. Here are the basics. The statute prohibits the sale of any essential commodity at an “unconscionable price” within an area for which a state of emergency is declared. (You can ﬁnd the statute on the FPMA Web site, just click on “Library” and scan down to “Price Gouging Statute.”) An “essential commodity” means any goods, services, supplies, equipment or articles of commerce which is necessary for consumption or use as a direct result of the emergency. It speciﬁcally includes not only petroleum products, but also food, water and ice (many of the things sold by marketers on a daily basis). During a declared state of emergency, the Attorney General’s oﬃce and the Department of Agriculture and Consumer Services, the statute’s two enforcement agencies, have their consumer hotline call centers staﬀed and ready to respond to complaints about price gouging. And gas, water and ice seem to be the most “hot button” commodities for those agencies. More importantly, the amount of the civil penalties demanded by the agencies in settlement bear absolutely no relationship to the extra gross margin realized by someone who makes a mistake, error in judgment or is simply negligent. No intent to charge an “unconscionable price” is required, and zero tolerance has become the rule, not the exception. | Fall 2008 Now back to the statute. The ﬁrst question a rational person would ask is, “What is an unconscionable price?” The statute’s unhelpful answer to this is that a price is presumed to be “unconscionable” if the price charged represents a gross disparity between the price of the commodity oﬀered for sale in the usual course of business during the 30 days immediately prior to the declaration of the state of emergency; or the price charged grossly exceeds the average price at which the same or similar commodity was readily obtainable in the trade area during the 30 days immediately prior to the declaration of the state of emergency. The second and third questions a rational person would ask are what in the devil is a “gross disparity” and what is “grossly exceeds” all about? (The statute’s use of such fuzzy terms is an example of the gross disparity between a standard that is reasonably understandable so a rational person can comply and one that creates a trip line that can’t be seen or avoided.) But wait – there is some measure of common sense to the statute’s hazy, crazy language. A price will not be “unconscionable” if the increase in the amount of the price is attributable to costs incurred in connection with sale of the commodity, or national or international market trends. The price gouging statute does not institute an automatic price or margin freeze. Increased costs from your supplier are allowed to be passed through. Also, if market trends are generally increasing, your prices can increase as they normally would. But be careful, very careful. www.fpma.org 40 | Petrogram
Table of Contents for the Digital Edition of Petrogram - Fall 2008
Petrogram - Fall 2008
Welcome, New Board Members
Getting the Message Out There
Spotlight on FPMA's 2008 Convention & Trade Show!
Out & About the Industry
Alcohol Beverages & Tobacco Regulation: Questions and Answers
Hedging 101: Part II
What Owners Should Know
The Price-Gouging Statute
Conference of Committees Registration Form
Index of Advertisers
Petrogram - Fall 2008
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