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Comptroller: City failed to respond sufficiently to price gouging complaints for COVID equipment

In the scramble for hand sanitizer, disinfecting wipes and masks during the early days of the pandemic, New Yorkers could report to the city any incidences of price gouging for sought-after personal protective equipment — such as the $22.99 price tag on a 12-oz bottle of Purell at a Greenpoint pharmacy, or 50 masks for $180 at a Chinatown market.

But a relatively small number of retailers were ever actually investigated, despite the deluge of price gouging complaints, according to a new audit from the city comptroller’s office to be released this week.

“Crises often create supply chain problems and open up an opportunity for greed-motivated people to profit here,” Comptroller Brad Lander told Gothamist. “And it turns out, we need to be more ready for that than we were.”

City and state officials passed a series of measures in March 2020 which specified legal provisions for “price gouging in an emergency situation” that made it illegal to hike prices beyond ten percent on PPE. State lawmakers introduced a bill to codify the ten-percent price increase as “illicit gouging.” Guilty retailers would face city-levied fines of up to $500 per hiked-up item, the de Blasio administration promised.

“Let me just say to business owners … don’t even think about price gouging in the middle of this crisis. It’s absolutely immoral, it’s unfair to your fellow New Yorkers. They will not forget,” former Mayor Bill de Blasio said in a March 9th, 2020 press conference. “We will (fine) you and we’ll keep fining you until you stop.”

The city’s Department of Consumer and Worker Protection received more than 38,000 complaints of price gouging in the 12-month span of March 2020 to February 2021 — a 114% increase compared to the same time period the previous year. According to the comptroller’s audit, the agency investigated only 28% of complaints received, with the inspections taking place an average of 43 days after they were alerted. In 16% of the cases, the inspections didn’t occur until more than 90 days after receipt.

Lander said the audit shows the need to bolster the city’s overall response for future emergencies, whether it’s overpriced masks during a pandemic or gasoline profiteering during Hurricane Sandy.

The comptroller’s office called on the DCWP to set up a prioritization structure to investigate price gouging complaints, and to implement deadlines for future investigations of price gouging complaints.

The DCWP has agreed to the comptroller’s recommendations, though it noted in the audit that timeframes and expectations ought to remain fluid during true emergencies.

“Price gouging during a pandemic is not only illegal, it’s immoral. We appreciate the comptroller’s recognition that, in the midst of a challenging public health emergency, DCWP launched an unprecedented enforcement program to protect New Yorkers from bad actors who sought to use the pandemic for financial gain,” said Carmel Agnant, a spokesperson for the department, in a statement. “For more than two years, DCWP has fielded thousands of complaints and conducted over 4,000 inspections, which led to a drastic decrease in complaints. We are in the process of implementing these recommendations to build upon this successful work to protect New Yorkers.”

Lander said the audit is not focused on finding fault with the city’s handling of price gouging complaints during an unprecedented modern pandemic, but rather to take lessons from the experience.

“I think (DCWP) feel they moved reasonably quickly to set up a pandemic price gouging rule, but then they were totally overwhelmed by the volume of complaints that they got,” Lander said. “They didn’t have anything like the resources necessary to respond rapidly to all the cases. So then it became a question of triaging.”

He added, “Here’s one opportunity: what kinds of price gouging might go along with different kinds of crises that we could see in the future? And how could the Department of Consumer and Worker Protection, which might not have thought about it before, be deployed with adaptive crisis capacity to move quickly to confront it?”

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