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Self-Storage Operators Must Consider Price-Gouging Laws During National State of Emergency

Operators of self-storage facilities must be cautious in their unit-rental and other product and service pricing in light of state price-gouging laws and the national state of emergency declared by the Trump Administration on March 13 in response to the coronavirus outbreak. Self-storage operators who excessively increase rates could face fines and other penalties.

“Once a state of emergency is declared, many states have price restrictions, commonly referred to as price-gouging laws, that take effect,” the Self Storage Association (SSA) posted on its website on March 13. “Although these laws differ, they generally put a cap on raising prices for certain goods and services above a certain percentage from the amount charged immediately preceding the declaration, subject to certain narrow exceptions. Some of these laws are clearly applicable to self-storage, some clearly are not, and others are uncertain in scope.

“Importantly, many of these laws create so-called strict liability offenses. In other words, it only must be proven that the unlawful rate increase occurred, without a valid exemption provided by the law, not that an operator had a specific intent to violate the law or ‘gouge’ the tenant.”

The SSA has created a document summarizing laws in all 50 states and Washington, D.C., that apply to raising prices during states of emergency. All but 16 states have applicable laws. “Although few businesses would intentionally raise their rates because of a natural disaster, the laws may affect [operators’] ability to implement even standard rate increases during a state of emergency,” SSA officials said.

California has been under a prolonged declaration of emergency since experiencing widespread wildfires in 2017. A rent-control bill signed by Gov. Gavin Newsom in October limits price hikes to 5 percent plus the local rate of inflation. That bill took effect on Jan. 1 and expires in 2030.

Penalties for violating the statute include up to one year in county jail and/or a fine up to $10,000. Violators are also subject to civil-enforcement actions, including civil penalties up to $2,500 per violation, injunctive relief and mandatory restitution, according to the attorney general’s office.

South Carolina is among the latest states to declare emergency, triggering its price-gouging restrictions, which makes it unlawful to “rent or sell or offer to rent or sell a commodity at an unconscionable price.” The law states that “A price increase that reflects the usual and customary seasonal fluctuation in the price of the subject essential commodity or the rental or lease of a dwelling unit or self-storage facility is not a violation of this section.” Normal fluctuations in the market based on supply and demand aren’t considered price gouging.

The South Carolina law will remain in effect until the declaration expires or is terminated, according to the source. A violation of the law is a misdemeanor, punishable by a fine up to $1,000 and/or up to 30 days in jail.

Sources:
Self Storage Association, Coronavirus & Price Restrictions
WLTX, South Carolina’s Price Gouging Law Now in Effect

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