Consumer Advisory Bulletin                  (updated May 2008, reissued 6-18-08)

Price-Gouging Rule in Effect in Tornado- and Flood-damaged Counties

Attorney General Tom Miller has announced that the State's anti-price-gouging rule is in effect in counties where disaster declarations have been issued in the wake of tornadoes, storms or floods.

Price-gouging is the practice of taking advantage of disaster victims by substantially raising the prices for needed goods or services without justification. Price-gouging is considered an unfair practice under the Iowa Consumer Fraud Act when a disaster declaration is in effect for a county. Iowa Administrative Rules describe the practice as raising prices unreasonably above the price at which the merchandise or service was sold in the usual course of business immediately prior to the onset of the emergency. (The rule recognizes the fact that prices sometimes may be higher because sellers also often incur increased costs.) The rule applies during the emergency declaration and "subsequent recovery period" up to six months.

The price-gouging rule -- which was adopted at the time of 1993's widespread floods -- covers but is not limited to water, food, medicines, sanitation supplies, utilities, lodging, and materials, goods, or services for clean-up or repair. Unconscionable price gouging might include unjustified high prices for materials or supplies that victims of storm damage may have little choice but to buy. In 1993, for example, there were price gouging allegations in the rental of "porta-potties" and water pumping equipment.

Complaints about possible price-gouging may be brought to the Attorney General's Office — 515-281-5926 in Des Moines, or toll-free at 888-777-4590. On the Web: www.IowaAttorneyGeneral.org.

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