Hurricane Sandy: Businesses Warned About Price Gouging

With Hurricane Sandy expected to make landfall as a mighty category 1 storm, consumers have been warned to be on the lookout and report any instances of price gouging.

"Natural disasters do bring out the best in some folks but the worst in others," said Katherine Hutt, spokeswoman for the Better Business Bureau. "Any time you're in a situation where you feel like you have to make a decision quickly, there will be people who want to take advantage of that."

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State laws in the affected areas forbid people from selling consumer goods at excessive prices during what is "clearly an abnormal disruption of the market."

In New Jersey, which is expected to feel the brunt of Hurricane Sandy, it is illegal to raise prices by more than 10 percent during a state of emergency.

The New York Attorney General's Office sent an open letter to businesses and cab companies warning them that any complaints of price gouging would be thoroughly investigated.

"New York general business law forbids those who sell essential consumer goods and services from charging excessive prices during what is clearly an abnormal disruption of the market," Attorney General Eric T. Schneiderman wrote. "Those who do so will ultimately see a reduction in their profits, faced with penalties, fines and directives to set up reimbursement funds."

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During Hurricane Irene last year, the New Jersey Division of Consumer Affairs fielded complaints about businesses overcharging for bottled water and gasoline. In the aftermath of the storm, there were allegations of contractors overcharging for essential work.

Allstate New Jersey Insurance Company said customers complained they had been charged thousands of dollars for jobs that should have cost hundreds of dollars, such as pumping water out of a basement, the Star-Ledger newspaper of New Jersey reported.

A senior citizen was reportedly billed $6,500, and an additional $1,000 in cash, for two hours of pumping.

Hutt recommended people get everything in writing, and check references and Better Business Bureau ratings before making any big repairs.

"Even if it is a legitimate business, you still want to make all the same precautions, even if it wasn't an emergency," she said. "We're warning people now because we're really expecting something after the worst of the storm passes. We see it in every natural disaster."