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Thousands of gouging complaints filed
Consumers demand explanations for pricing; Tennessee files first post-Katrina gouging suits.
September 7, 2005: 4:53 PM EDT
By Rob Kelley, CNN/Money Staff Writer

NEW YORK (CNN/Money) - Phone hotlines set up to combat price gouging after Hurricane Katrina have gotten thousands of calls related to gasoline prices.

"We've received well over 7,000 complaints related to pricing and the majority of those have been about gasoline compliance," said Jacob Ray of the Mississippi Attorney General's office. "We provided an 800 number that's been on radio and television. And we're following up complaints with investigators who are all over the state."

Alabama's price gouging hotline received 890 complaints in the days following Katrina, with 80 percent involving gasoline concerns.

23 states have laws explicitly prohibiting price gouging, but definitions of the practice are different. There is no federal statute on the practice.

The attorneys general of Alabama and Florida announced a multi-state inquiry to determine the best course of action to respond to rising fuel prices. Attorneys general from over 30 states participated in a conference call on September 1 to determine how their inquiry would proceed.

"We are prepared to immediately conduct a comprehensive inquiry, and if necessary we will issue subpoenas to oil companies to obtain records necessary to determine the relevant costs to produce gasoline, sales prices and margins during the period of time leading up to Hurricane Katrina and afterward," said Alabama Attorney General Troy King.

On the Federal level, the Senate Energy Committee held a meeting at which industry and government officials testified about fuel markets.

Committee Chairman Pete Domenici (R-N.M.) said the mission for legislators is to determine what form future price gouging legislation would take.

"Right now we are encouraging the Attorneys General to proceed with their investigations, and the FTC is preparing a detailed report on pricing for us," he said. "After that, we'll look at where to go -- but I think there's a general consensus that we should [prosecute price gouging] through the states."

"And we have warned those that are convicted that they'll have to testify publicly under oath," he said.

Tennessee was the first state to file suit against gas stations, announcing two suits in the last week. Tip Top Mart of Chattanooga was charging $5 a gallon following Katrina, allegedly violating the Tennessee Price-Gouging Act.

A McMinnville, Tennessee station was the subject of the second suit after it charged $7.00 a gallon for gasoline. The posted price was $3.50, but gasoline pumps had notes on them saying "Doubled," which most consumers missed until after they had filled their tanks.

Violations of Tennessee's gouging act are misdemeanors with a potential fine of $1,000 per violation.

In New Jersey, consumer protection officials visited over 400 gas stations over the week, finding more than 100 violations of state regulations. In New Jersey, it is illegal to raise prices more than once every 24 hours, having a pump price different from the marquee or operating unregistered pumps.

Gouging laws were working for consumers even in states where no suits had been filed.

"We used the state's gouging law before when there were hurricanes," said Noelle Talley of the North Carolina Attorney General's office. "It also serves as a deterrent effect, reminding businesses that we won't tolerate it."

Arkansas officials had received hundreds of calls relating to gasoline, and anticipated more as rebuilding progresses.

"We're facing a long recovery process, and we've got tens of thousands of people [who've evacuated their homes]," said Matt DeCample of the Arkansas Attorney General's office. "We anticipate more attempts at price gouging on other goods -- essential supplies -- as this progresses."


Georgia's governor announced a moratorium on the state gas tax -- read more here.

Consumers have been letting politicians know that gas prices are a top priority. Full story here.  Top of page

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