News
November 20, 2017
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Local and state officials warn fire victims about price gouging

By: Katherine Minkiewicz
November 3, 2017

Over the past several weeks following the Sonoma Complex Fires, the Sonoma County DA’s and state attorney’s office have leapt into action to warn fire victims about the threat of price gouging and to remind businesses of the consequences of breaking the Price Gouging Law, which went into effect in nine different North Bay Counties after Gov. Jerry Brown declared a state of emergency on Oct. 9.

During a state of emergency, California law usually prohibits charging a price that is over 10 percent of what the item originally cost before a state or local state of emergency is declared by officials. This doesn’t just apply to lodging, but also gas stations and businesses that sell food, emergency supplies and other essentials.

Dean Preston, executive director of Tenants Together, a San Francisco based nonprofit that provides counselling and resources to tenants who may have had their fair rent or other housing rights infringed upon, discussed in a phone interview the excessive rent ban and price gouging law and how to spot if you’ve been a victim of unfair gouging.

Preston explained the short-term law, saying, “The price gouging law is not limited to rent, it is a whole range of consumer goods and services and the law provides that once the state of emergency is announced by the governor or by local officials, that it becomes illegal for sellers to charge more than 10 percent of what they were charging before the disaster.”

The law applies to rent that has also risen above 10 percent after a disaster. Since the start of the wildfire and the commencement of the state of emergency, rent has allegedly increased a whopping 36 percent in Sonoma County and 23 percent in Napa County, according to a Press Democrat report.

Prior to the devastating fires, the average rent in Sonoma County for a studio apartment was around $921, according to data compiled by RentCafe. Now, upon an apartments.com search, it was found that the cost for a 778-square foot studio apartment in Santa Rosa can be as high as $3,700 a month — a $2,779-dollar difference and a 401 percent increase. The most inexpensive studio listed on apartments.com was still a 38.4 percent increase at $1,275 a month.

“These are violations of the price gouging law,” Preston said regarding goods, services and rent being increased, “But the impact of rent is not often talked about and we thought it was important to elevate that and alert everyone, particularly in the counties that have suffered wildfires, that landlords cannot take advantage of the number of people looking for housing by jacking up prices.”

When asked if there are any exceptions to the price gouging law — for example, if after having utility costs raised following a disaster landlords then should increase rent to cover the increased costs, there then is a fine line to what could be considered unfair price gouging, according to Preston.

“There is an exception in the statute, if the price increase that is being charged is directly attributable to a cost increase. So, in other words, if there was to be a heat wave in a county and a retail store is selling air conditioners and there’s a declared state of emergency and they increase the price by 20 percent, that would appear to be price gouging,” Preston explained. “But if the seller had their costs go up 20 percent by the wholesaler and if the seller could show that is why they increased the price, then they may have a defense for price gouging.” 

On Oct. 17 Sonoma County District Attorney Jill Ravitch issued a consumer alert after hearing reports of price gouging by landlords and hotels in the aftermath of the destructive wildfires.

Following the reports, District Attorney investigators conducted several investigations on “numerous hotels” between Santa Rosa and Petaluma, but found that the reported hotels were indeed complying with the law.

“I’m happy to say we haven’t had any hotels not comply with the price gouging law,” Ravitch said.

In a follow up phone call with Ravitch a week later, the district attorney said there were yet still no confirmed cases of price gouging by local hotels and landlord and no cases had been filed as of Friday Oct. 27 and that some investigations into complaints were still ongoing.

“We have not yet filed any (price gouging cases, we are still investigating. If people have questions and concerns they can go up on the DA’s website and they can send an email directly to us with whatever information they have and we do have a designated telephone number for people to call — (707) 565-5317,” Ravitch said.

However, Ravitch issued a statement early last week addressing rumors that there were numerous cases of rent and price gouging, saying that the complaints would be investigated and taken seriously.

“There have been many reports and rumors of price gouging on social media and our office has received numerous complaints of price gouging. I want to assure the public that we take these complaints seriously and are diligently investigating all complaints… The complaints that have been investigated so far have not uncovered any actual price gouging in violation of the law,” Ravitch said in the DA’s office issued statement.

According to the statement there are multiple factors that go into determining if there has been price gouging occurring, which doesn’t just include looking at whether a price for goods or service is more than what others may charge. For instance, “Hotels have a wide range of pricing that varies depending on formulas established by corporate headquarters based upon days of the week, special events and occupancy,” Ravitch’s statement further explained. 

However, during the initial Investigation into some of the first complaints received, investigators also found that some hotels were actually being accommodating, providing lower rates for fire evacuees and victims. 

Adan Barragan, a property manager for the Best Western Hotel in Rohnert Park, said they are giving discounted rates to victims after verification of evacuee’s previous address.

“We are giving discounted rates when people present their ID, we usually verify their address,” Barragan said. “We generally need a credit card for people to book, but we understand and we are doing everything we can to work with them (fire evacuees).”

Doubletree by Hilton in RP was not initially offering discounted rates for victims and Booking Agent, Blaire Cozzi said at first, they were not offering rates, but were cooperating with victim’s insurance companies to get costs covered.

“We aren’t currently (offering discounted rates) as far as I know, but I think people are mainly going through their insurance,” Cozzi said. A few weeks later, the hotel did show that they were offering a 5-10 percent discount for rates.

While local investigations to gouging complaints are still ongoing, in a statement, California Attorney General Xavier Becerra urged fire evacuees to file a complaint with the attorney general’s website if they suspect or believe they have been a victim of price gouging and warned business about the consequences of price gouging.

“This is not a matter I take lightly — the blazes have claimed numerous lives and have displaced thousands throughout our communities. As the state’s top law enforcement officer, I am prepared to prosecute those unscrupulous individuals who try to turn a profit at the expense of neighbors and friends. I encourage anyone who is aware of price gouging to immediately file a complaint through my office’s website, www.oag.ca.gov, or call (800) 952-5225,” Becerra said.

Violators of the price gouging law could face up to one year in county jail or prison and could be subject to paying a fine of up to $10,000.

Despite the warning to businesses to not take part in price gouging, Preston said there are usually a lot of cases of gouging seen after disasters, yet many are left unprosecuted.

“We regularly see rent gouging after natural disasters particularly when it is a big one with so many people and there are landlords who will take advantage of people. Yet there has not been much prosecution of this and we are very encouraged that the attorney general’s office appears to be interested in these cases,” Preston said.