In the weeks following the devastating wildfires in the Los Angeles area, the California Department of Justice (DOJ) sent hundreds of letters to owners of hotels and vacation rental properties, as well as owners of apartments and other rental housing, warning that price gouging was prohibited under an executive order by Gov. Gavin Newsom through the first week in March.
In California, “price gouging” is typically defined as charging over 10% above the amount charged before a state of emergency was declared – in this case on Jan. 7. It can apply to everything from bottled water to generators, first-aid supplies and more. The area was already experiencing a serious housing shortage before the fires left thousands of homes reduced to rubble or uninhabitable for a time due to lack of utilities, toxins and structural damage.
The penalties can be costly
Those who are found to have engaged in price gouging can face up to $10,000 in fines and/or a year in jail. They can also face additional civil penalties including $2,500 for each violation and payment for restitution and injunctive relief. There’s also the potential for a civil lawsuit by the alleged victim.
California Attorney General (AG) Rob Bonta and his DOJ have opened a number of investigations into price gouging throughout LA County and beyond. AG Bonta said that his department and local law enforcement are fighting “this unlawful and unscrupulous conduct” with a new Disaster Relief Task Force and a site set up for people to report price gouging. This can apply not just to prices or rent charged to those seeking new temporary or long-term housing. It can also include rent increases for those already in properties.
Real estate agent and landlord facing charges
Those who own property aren’t the only ones at risk of being accused of price gouging. In February, AG Bonta announced charges against a real estate agent as well as a landlord for raising the rent on a home in Hermosa Beach by 36% after the fires. This case began with a complaint to the DOJ by a person who was seeking to rent the home.
The California DOJ is taking this matter seriously. It has numerous law enforcement personnel and others in the field investigating complaints filed through its price gouging hotline and website. Any property owner who finds themselves under investigation or has any questions or concerns is wise to get legal guidance accordingly.
