Politics & Government

Three months post-Matthew: 406 price-gouging complaints, 0 charges

In this photo illustration, images from real tweets and other postings from those claiming price gouging during and after the arrival of Hurricane Matthew with the hash tag of @SCPriceGouging.
In this photo illustration, images from real tweets and other postings from those claiming price gouging during and after the arrival of Hurricane Matthew with the hash tag of @SCPriceGouging. Staff photo illustration

A $4,999 Harleyville hotel room. A $33 case of bottled water in West Ashley. A $7 gallon of gas from a Dillon convenience store.

These were among roughly 400 reports of alleged price gouging the S.C. Attorney General’s Office received statewide from Oct. 4 through Nov. 3 – the period when the state’s anti-price-gouging law was in effect because of Hurricane Matthew, according to records obtained by The Island Packet and The Beaufort Gazette under the state Freedom of Information Act.

About two dozen complaints – mostly about tree-removal businesses – came from Beaufort County, records show.

But in the two months since the statute ended, Republican state Attorney General Alan Wilson hasn’t prosecuted a single business for price gouging. His office says it has ongoing investigations but won’t release any details on those cases.

The misdemeanor charge is punishable by a maximum 30 days in jail and a $1,000 fine.

Meanwhile, three other states struck by Matthew – Florida, Georgia and North Carolina – are in the process of citing several businesses with price gouging in Matthew’s wake, officials there said. In one case, the Florida Attorney General’s Office said it is pursuing a civil case against a franchise hotel chain that several South Carolina consumers also accused of price gouging.

The Florida and North Carolina offices investigating price-gouging complaints will sometimes release the names and addresses of businesses being investigated to warn potential future customers.

That’s not the case in South Carolina.

Although the Attorney General’s Office provided The Island Packet and The Beaufort Gazette with information about the type of commodity, the town where the business is located, and the reported price in each complaint, businesses’ names were redacted.

“Our office media policy is that we do not comment on ongoing investigations,” Wilson’s spokeswoman, Hayley Thrift Bledsoe, said in an email to the newspapers.

Thrift Bledsoe wouldn’t disclose how many of the 406 complaints received by the Attorney General’s Office were determined to be unsubstantiated or still under investigation. Further, she couldn’t provide any examples in recent years of when the office prosecuted a business for price gouging.

Without any enforcement, consumers are less likely to report future potential cases of price gouging, experts say.

“(Anti-price-gouging laws) appear to be passed mostly as a political device, especially in places where enforcement isn’t followed up,” said Mike Tarrant, an economist at Potomac Economics, a Washington, D.C.-area consulting firm.

Vague S.C. definition

Under South Carolina law, price gouging is considered a “gross disparity” between the quoted price and the average price for a good or service in the 30 days immediately prior to an official state-of-emergency declaration.

But “gross disparity” isn’t defined in the statute.

Almost half of South Carolina’s Matthew-related price-gouging complaints received by the Attorney General’s Office were for gasoline, agency records provided to the newspapers show.

If a gallon of gas jumps approximately 15 percent from less than $2 to $2.24 — as was reported, according to agency records, by a consumer at a Columbia convenience store in the days preceding the Oct. 8 hurricane — is it price gouging?

“The problem there is how do we define what that means?” said Geoffrey Rapp, associate dean for academic affairs at the University of Toledo College of Law, who has written about price- gouging laws.

Defining price gouging is relatively easy in California where the law caps the maximum price increase that retailers can charge after a declared emergency at 10 percent.

It’s more challenging in states such as South Carolina, North Carolina, Florida and Georgia, where their state laws fail to specify a standard for price gouging, the newspapers’ review found.

One person tweeted to Wilson’s Twitter account, “Read the code but is there specific amount/percentage that = gouging other than ‘grossly exceeds?’”

A vague definition makes it less likely for a state to prosecute, Rapp said.

During the historic 2015 flooding in South Carolina, Wilson’s office prosecuted no reports of price gouging, Thrift Bledsoe said.

In response to the newspapers’ open-records request, Wilson’s office supplied less than a dozen reports stemming from the 2015 flooding that fell within the 30 days the anti-price-gouging statute was in effect.

Asked about the large discrepancy in the number of reported complaints between 2015 and 2016, Thrift Bledsoe replied only in an email, “Our FOIA team has responded to your request with all information responsive to your request.”

A local law enforcement agency charged one man with two counts of price gouging following the 2015 flooding.

A Summerville tow truck operator was accused of charging two customers $150 and $250 when his typical towing fee was $85, according to Dorchester County Sheriff’s deputies.

However, a deal was arranged after the two alleged victims agreed for the tow truck operator to pay them back, said sheriff’s Maj. Tony Phinney when contacted by The Island Packet and The Beaufort Gazette.

Asked why the case was handled locally, Phinney replied, “It’s more expeditious for us to do it.”

In the wake of Hurricane Matthew, no consumers reported price-gouging complaints to the Beaufort County Sheriff’s Office or the Beaufort, Bluffton or Port Royal police departments, agency representatives said.

A tale of two states

The case of the Red Roof Inn hotel chain illustrates how South Carolina’s enforcement of the anti-price-gouging law during Hurricane Matthew contrasts with other states.

At least four people alerted the S.C. Attorney General’s Office Twitter account (@SCPriceGouging) of potential price gouging at the Red Roof Inn-Santee near Orangeburg, the newspapers’ review found. Their tweets included photos of room rates ranging from $522 to $530.

“We cannot control the Expedia site,” said Peter Patel, general manager of Red Roof Inn Santee, when contacted by the newspapers. “They made a mistake. We didn’t charge anyone $500.”

An Expedia representative disagreed.

“Hotels are responsible for putting in their rates into Expedia’s Marketplace,” wrote Expedia senior manager Amanda Graham in an email to the newspapers. “We don’t manage those prices.”

A representative from Red Roof’s corporate office cited the incident as “the result of a technical mapping issue” that “was almost immediately resolved.”

“No guest booked this rate through Expedia,” spokeswoman Karen Zhu wrote in an email. “Red Roof does not condone price gouging or engage in this practice.”

The S.C. Attorney General’s Office will not release any information about ongoing cases, so it is unknown if the allegations involving Red Roof are under investigation.

However, the hotel chain is facing civil action in Florida, according to officials there.

In the days leading up to the hurricane when evacuees flooded the Gulf Coast, Red Roof Inn-Clearwater raised room rates by 80 percent and up to 200 percent, with some guests being charged $140 more than the average nightly rate, according to a news release from the Office of Florida Attorney General Pam Bondi.

Bondi’s office is asking the hotel to pay civil penalties and restitution.

When asked about the situation in Florida, Zhu told the newspapers, “This is a franchised property and Red Roof does not comment on pending litigation.”

Pricey water?

Of the approximately 400 complaints made to the S.C. Attorney General’s Office, more than a quarter came from the Charleston metro area, the newspapers’ analysis found. A dozen consumers reported a case of bottled water selling for $14.70 at one or more unnamed Summerville businesses.

In records provided to the newspapers, the Attorney General’s Office redacted the names of businesses allegedly price gouging to “ensure that there is not a premature release of information that might be used in a prospective law enforcement action,” Assistant Attorney General Jonathan Williams wrote in an email.

A sampling of tweets sent to the office’s Twitter handle shows Walmart charged $14.70 for a case of bottled water, the newspapers’ review found. One of the photos tweeted came from Charleston news station WCBD.

Asked for a response, Leslee Wright, a spokeswoman from Walmart’s corporate office in Bentonville, Arkansas, wrote in an email to newspapers: “Emergencies, like Hurricane Matthew, are personal to us. Those affected include our own associates, customers and their families. After review of this situation, we believe the allegations being made are false. Walmart strives to maintain the lowest possible price, in compliance with the applicable laws.”

Beaufort County complaints

Almost half of the state’s tree-removal complaints — 13 of 30 reports — originated in Beaufort County, agency records show.

Local tree companies and homeowners contacted by the newspapers said 13 cases appears to be far fewer than what they heard anecdotally.

13 Tree removal

4 Gas

2 Hotel room

2 Generator

4 OtherSource: S.C. Attorney General’s Office

“(Thirteen complaints) seems very low,” said Beaufort resident Paul Bauer, who shared stories of neighbors upset at steep tree-removal estimates.

Many possible price-gouging cases likely went unreported to the state.

After a 30-inch oak tree fell onto Bauer’s house, he said an out-of-state company quoted him $13,000 for the job. Suspicious, he shopped around and found another company that did the work for $8,000.

But he did not report the first company to the Attorney General’s Office.

“I was reluctant to call out the company because pricing for tree removal is all over the board,” Bauer said. “It was a high price. Was it gouging?”

Unlike displayed gas prices that people see on their daily commutes, most consumers lack the everyday knowledge of a fair price to remove a tree, experts say. And when tree-removal companies offer bids verbally, there’s no documentation to provide to the Attorney General’s Office if property owners believe they were victims of price gouging.

I was reluctant to call out the company because pricing for tree removal is all over the board. It was a high price. Was it gouging?

Beaufort resident Paul Bauer

In comparison to gas stations or hotels, Tarrant, the economist who has studied anti-price-gouging laws, said he found anecdotal evidence that states prosecute debris-removal contractors less frequently, perhaps because the businesses are mobile and often from out of state.

The concept of a “reputation cost” can affect local companies, but typically not out-of-state businesses, he said.

“A smaller, non-local contracting firm can show up, charge higher prices and not necessarily burn their reputation in the process,” Tarrant said.

Most local tree companies contacted by the newspapers said that as months have passed since Hurricane Matthew, they’re hearing fewer complaints from clients about price gouging by out-of-state businesses, many of which have since left the area.

“(But) we’ve still got those vultures at the last minute looking for crumbs and abusing the system,” said Sonya Reiselt, a certified arborist with Southern Tree Services in Beaufort.

It remains to be seen, however, whether any businesses reported to the S.C. Attorney General’s Office will be prosecuted.

Kelly Meyerhofer: 843-706-8136, @KellyMeyerhofer