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March 02, 2022 12:49 PM

New York City left most pandemic price-gouging complaints uninvestigated, audit finds

Crain's New York Business
Shuan Sim
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    New York City Comptroller Brad Lander found the Department of Consumer and Worker Protection failed to adequately investigate price-gouging complaints during the pandemic.

    The comptroller said DCWP achieved some progress with the complaints it investigated. Some of the most egregious violations the agency uncovered included sellers pricing an 8-ounce bottle of hand sanitizer for $28, a 10-pack of masks for $300 and a single N95 mask for $20, and that most of the price-gouging complaints came from Black and Latino neighborhoods hit hardest by the pandemic.

    However, in the comptroller's audit, released last week, of more than 11,000 price-gouging complaints received between March and September 2020, DCWP responded to only 28%, with those inspections occurring on average 43 days after receipt, and 16% of cases were investigated after 90 days. The agency had not established time targets or productivity measures to ensure timely addressing of complaints, the report said.

    The agency did not have a formal, written protocol to assess which complaints should be prioritized, nor was there an independent reviewer to ensure officers followed the rules. DCWP was said to have established criteria for assessing the priority of complaints, but the report noted no such documentation.

    "I appreciate the incredible hardship our agencies, including DCWP, went through at the onset of the pandemic to safeguard New Yorkers from the pandemic and unscrupulous profiteers," Lander said. He added that city agencies must arm themselves with tools to protect consumers in moments of emergency, whether that is the next COVID-19 variant or the next superstorm.

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    Lander's office made four recommendations to DCWP: memorializing its enforcement criteria for price gouging, establishing an independent review process for its complaint selection determinations, establishing how often businesses with multiple complaints should be inspected and specifying time frames for resolving complaints.

    DCWP Commissioner Peter Hatch, in response to Lander's report, said the agency had faced a deluge of complaints at the onset of the pandemic and "had to overcome additional hurdles" including limited resources, legal staff working remotely and uncertainty regarding which businesses were open for inspection.

    DCWP has undertaken measures to improve the program, Hatch said, including implementing heavier tiered fines of up to $3,500 for a third violation.

    "We intend to use the audit report's four recommendations for process improvements to help enhance the policies and procedures already in place to administer this new rule going forward," Hatch said.

    This story first appeared in our sister publication, Crain's New York Business.

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