Stop Disaster Price Gouging Act
- Bill Number
- H.R. 2427
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Emergency Management
- Status
- Introduced
- Latest Action
- 2025-03-27: Referred to the House Committee on Energy and Commerce.
- Last Updated
- 2026-06-24T22:14:11Z
AI-Generated Summary
Purpose of the Legislation
The "Stop Disaster Price Gouging Act" aims to prevent excessive price increases on essential goods, services, lodging, and repairs during federally declared major disasters or emergencies. It treats such price gouging as an unfair or deceptive business practice, protecting consumers when they are most vulnerable.
Key Provisions
- Price Increase Limits: After a President declares a major disaster or emergency under the Stafford Act (a federal law for disaster relief), sellers cannot raise prices by more than 10% above pre-disaster levels for:
- Essential consumer goods and services, hotel lodging, and residential rentals—for 30 days in the affected area.
- Repair or reconstruction services—for 180 days in the affected area.
- Markup Restrictions: Sellers cannot charge more than 50% above their own costs for essentials, lodging, rentals, or reconstruction services for 30 days if they did not charge that price before the disaster.
- Exceptions to the Prohibition:
- Increases directly tied to higher supplier costs, labor, or materials, limited to a 10% markup over the seller's usual pre-disaster practices.
- Increases due to tariffs or national trade policies.
- Hotel/motel rate hikes from regularly scheduled seasonal adjustments.
- Rental increases from pre-agreed contracts or major repairs amortized over the lease term.
- Enforcement Mechanisms:
- The Federal Trade Commission (FTC) enforces the rules using its existing powers under the FTC Act (a law against unfair business practices), treating violations as deceptive acts.
- States can file lawsuits in court to stop violations, seek damages, or obtain other relief for residents; they must notify the FTC first, and the FTC can intervene.
- Individuals harmed by violations can sue in state or federal court for injunctions (court orders to stop the practice), actual monetary damages, or both; willful violations may triple damages, and winners get court costs and attorney fees. Lawsuits must start within 2 years of discovering the violation.
- Penalties: Up to $25,000 per violation (each instance counts separately), with a total cap of $25,000 per related set of violations. Amounts adjust annually for inflation using the Consumer Price Index (a measure of price changes for everyday goods). Penalties fund a special account to help communities in disaster zones.
- Definitions:
- "Essential consumer goods and services" include items vital for survival and recovery, such as food, water, medical supplies, fuel, building materials, transportation, and storage.
- Relation to State Laws: The act does not override state laws unless they directly conflict.
Significant Changes to Existing Law
This bill introduces a nationwide federal standard against price gouging during disasters, building on the FTC Act by explicitly defining and prohibiting it in emergency contexts. Previously, such protections varied by state, with no uniform federal cap on price hikes or markups. It expands FTC authority to regulate disaster-related pricing and creates new funding from penalties for disaster aid, which was not previously specified.
Potential Impacts
- On Citizens: Provides stronger safeguards against exploitative pricing for necessities during crises like hurricanes or floods, potentially reducing financial burdens and improving access to aid. Individuals gain a direct way to seek compensation.
- On Government Agencies: Increases workload for the FTC in monitoring and enforcing rules, with added coordination with state attorneys general. Creates a dedicated fund from penalties to support disaster-affected communities, easing pressure on federal relief budgets.
- On Businesses: Restricts profit margins on essentials in disaster zones but includes exceptions for legitimate cost increases, aiming to balance consumer protection with operational needs. Could lead to more compliance efforts, like tracking pre-disaster prices.
- On International Relations: Minimal direct impact, though exceptions for tariffs might indirectly affect trade-related pricing during global emergencies.
Main Stakeholders Affected
- Consumers and Residents: Primary beneficiaries in disaster areas, protected from sudden price spikes on survival items.
- Businesses and Sellers: Retailers, hotels, landlords, repair services, and suppliers of essentials face new pricing limits and potential penalties.
- Government Entities: FTC (lead enforcer), state attorneys general (for local actions), and federal disaster relief programs (via penalty-funded aid).
- Communities in Disaster Zones: Gain from the relief fund to support recovery efforts.
Notable Legal, Constitutional, or Political Implications
- Legal: Establishes price gouging as a federal unfair trade practice, enabling multi-level enforcement (federal, state, private) without preempting compatible state rules. The private right of action empowers individuals but could increase litigation. Penalties are civil (fines, not criminal), with inflation adjustments to maintain effectiveness over time.
- Constitutional: Relies on Congress's power to regulate interstate commerce (trade across state lines), which could apply to disaster-related goods. No overt challenges noted, but exceptions for costs ensure it avoids overly broad restrictions on business.
- Political: Addresses public concerns about exploitation during emergencies (e.g., post-hurricane price surges), promoting equity in crisis response. As an introduced bill, its passage could set a precedent for federal intervention in market behaviors during national events, potentially influencing future consumer protection laws.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Friedman, Laura [D-CA-30]
Cosponsors (1)
Recent Actions
- 2025-03-27: Referred to the House Committee on Energy and Commerce.
- 2025-03-27: Introduced in House
- 2025-03-27: Introduced in House
Bill Versions
- Stop Disaster Price Gouging Act — issued 2025-03-27 — PDF (11 pages)