Cracking Down on Price Gouging Act
- Bill Number
- H.R. 4720
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Energy
- Status
- Introduced
- Latest Action
- 2025-07-23: Referred to the House Committee on Financial Services.
- Last Updated
- 2025-09-16T15:54:51Z
AI-Generated Summary
Purpose
The Cracking Down on Price Gouging Act (H.R. 4720) aims to strengthen federal protections against excessive pricing of essential materials and goods during times of scarcity or emergency. It amends the Defense Production Act of 1950 (DPA), a law that allows the government to prioritize production and distribution of critical resources, by expanding prohibitions on hoarding to explicitly include price gouging and increasing penalties for violations.
Key Provisions
- Prohibition on Price Gouging: Updates Section 102 of the DPA to ban not only hoarding but also selling or offering to sell "scarce" materials (designated by the President) or "critical goods" (during an "acute shortage") at prices that "grossly exceed" prevailing market prices or qualify as "unfairly excessive."
- An "unfairly excessive price" is defined as one with a "gross disparity" compared to prices just before the scarcity designation or shortage began. A 10% price increase is presumptively a gross disparity, but smaller increases could still violate the law if they create an unfair excess.
- Exceptions apply if the price rise results from a seller's legitimate business needs (e.g., covering unavoidable costs) or factors beyond the seller's control.
- Definitions:
- Acute shortage: A sudden reduction in supply caused by events like diseases, natural disasters, military conflicts, terrorism, supply-chain issues, or extreme industry consolidation.
- Critical good: Includes consumer food and household items, essential medical or emergency supplies/services, energy resources (e.g., fuel, electricity, heating oil), and other essentials for public health, safety, or welfare.
- Penalties: Amends Section 103 of the DPA to impose fines for willful violations. The penalty is the greater of $20,000 or 300% of the revenue gained from the illegal activity.
Significant Changes to Existing Law
- The original DPA's Section 102 focused mainly on preventing hoarding of scarce materials for resale at above-market prices. This bill broadens it to cover price gouging explicitly, applies it to a wider range of "critical goods" beyond just materials, and introduces clear thresholds (e.g., 10% presumptive disparity) and exceptions.
- Penalty enhancements replace vague or lesser fines with a revenue-based structure, making enforcement more severe and tied to the scale of the violation.
- Adds new subsections for definitions and exceptions, providing more precise guidance for what constitutes illegal pricing.
Potential Impacts
- On Citizens: Could protect consumers from sudden price spikes on essentials like food, medicine, or fuel during crises (e.g., pandemics or disasters), making these items more affordable and accessible.
- On Government Agencies: Empowers agencies like the Department of Justice or Federal Trade Commission (which enforce the DPA) to investigate and prosecute violations more effectively, potentially increasing enforcement workload but with stronger deterrents.
- On Businesses: Sellers of critical goods may face higher compliance costs (e.g., monitoring prices during shortages) and risk substantial fines, encouraging fair pricing but possibly deterring some market participation.
- On International Relations: Minimal direct impact, though it could indirectly affect global supply chains for U.S.-imported critical goods by influencing pricing during international disruptions (e.g., conflicts or trade issues).
Main Stakeholders Affected
- Consumers and Households: Primary beneficiaries, as they rely on affordable access to critical goods during shortages.
- Businesses and Sellers: Retailers, manufacturers, and suppliers of food, medical supplies, energy, and other essentials, who must adjust pricing practices to avoid penalties.
- Government Entities: Federal agencies responsible for DPA enforcement (e.g., executive branch departments) and Congress, which oversees related economic policies.
- Industry Groups: Sectors like healthcare, energy, and food production, potentially advocating for or against the bill based on compliance burdens.
Notable Legal, Constitutional, or Political Implications
- Legal: Builds on the DPA's existing authority for emergency economic controls, providing clearer standards to reduce ambiguity in court challenges. The presumptive 10% threshold could streamline prosecutions but allow flexibility for case-by-case review.
- Constitutional: Reinforces federal power under the Commerce Clause to regulate interstate pricing during national emergencies, but may raise questions about interference with free market principles or property rights if exceptions are narrowly interpreted.
- Political: Signals a bipartisan push (introduced by Rep. Riley of New York) for consumer protection in crises, potentially influencing future emergency legislation. It could spark debates on government overreach versus anti-exploitation measures, especially in polarized economic policy discussions.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Recent Actions
- 2025-07-23: Referred to the House Committee on Financial Services.
- 2025-07-23: Introduced in House
- 2025-07-23: Introduced in House
Bill Versions
- Cracking Down on Price Gouging Act — issued 2025-07-23 — PDF (5 pages)