Residents desperate for a tank of gas or a place to stay in the wake of Sandy were taken advantage of by some unscrupulous business owners looking to profit from the state of emergency, according to New Jersey's attorney general, who filed suit Friday against eight businesses for price gouging.
Attorney General Jeffrey Chiesa announced civil lawsuits against seven gas stations and a hotel in northern New Jersey, the first price gouging cases brought in the state since the storm.
The gas stations were accused of raising pump prices anywhere from 17 to 59 percent higher during the state of emergency related to the storm. The hotel was accused of raising room rates by 32 percent.
The state's Consumer Affairs Division has received nearly 2,000 complaints about alleged storm-related price gouging to date, Chiesa said, adding that about 83 percent involved gas stations. The division has issued more than 170 subpoenas to New Jersey merchants.
"We have hundreds of complaints still to investigate," Chiesa said. "Anyone seeking to prey upon the desperation of consumers during this state of emergency will find that the penalties far outweigh any ill-gotten profits."
Violators can be fined up to $10,000 for a first offense and up to $20,000 for a second offense under the state's price gouging statute, which prohibits increases of more than 10 percent during a state of emergency, or for 30 days after it's lifted.
Merchants facing additional costs during an emergency are not allowed to exceed 10 percent above the normal markup from cost.
The businesses named in the complaints include a Howard Johnson Express in Parsippany run by the Ratan Hospitality Group, LLC., that was accused of increasing room rates to $119 per night during the storm, compared to its pre-storm rates of $90 per night. A person at the hotel referred calls his attorney, who did not immediately respond.
The charged stations were a Lukoil station in Paterson operated by Kistruga, Inc., which was accused of raising pump prices by 59 percent; a Lukoil station in Newark, run by Alen Service Corp., accused of raising pump prices for regular gas by 25 percent, and diesel fuel by 31 percent; a Delta gas station in Bloomfield operated by The Vinny Fuel Corporation, which was accused of raising regular gas prices by 35 percent; a BP station in Perth Amboy operated by NJPO, LLC, which was accused of raising regular gas prices by 33 percent; an Exxon station in Lyndhurst operated by S&D LLC, which was accused of increasing regular gas prices by 21 percent and supreme-grade gas by 14 percent; and a Newark Sunoco station operated by Couto & Sons, Inc., which was accused of raising regular fuel prices by 17 percent, plus-grade, premium-grade, and ultra-grade fuel by 11 percent, and violating a state law against increasing prices more than once during a 24 hour period.
A manager at the Lukoil station said the price increase of $2.05 per gallon was a "mistake," and the increase was supposed to be only 20 cents. He said there was chaos and confusion when the gas truck arrived, and the wrong inflated price was in effect for just 45 minutes. He promised a refund to customers who were overcharged during that time.
At a seventh station charged, a Clifton Gulf station called C.S. George & Sons Inc., the owner said accusations that he had engaged in price gouging by raising regular gas prices to $4.69 per gallon — an increase of 34 percent — were inaccurate. Station owner John George said the business that's been in his family for 52 years had gone to great lengths to help residents during the storm.
George said he had to add 20 extra workers to his rolls, extend his normal 12-hour days to operate 24-7, feed his staff breakfast, lunch and dinner to keep the station open around-the-clock, and incur additional expenses, from the electricity required to keep the station open, to having to buy gas from a distributor in Massachusetts when it was unavailable in New Jersey. He said the 52 consumers who filed price gouging complaints against his station were out of more than 15,000 customers he estimated he served during the storm.
"I was open 24 hours a day — at that point in time that's what I felt was fair, I had so many extra expenses, and we made sure everybody on line got a full tank of gas," he said. "Instead of being a bad guy, I should be a good guy, we tried to do a service to this community, not a disservice."
Bruce Rosen, outside counsel for the Framingham, Mass.-based Gulf Oil LP, said the company was opposed to price gouging and claimed the Clifton station was currently selling off-brand gasoline and had not been affiliated with Gulf Oil LP for several years. A call Friday evening to John George regarding the Gulf Oil LP claims was not immediately returned.
Chiesa said he expected price gouging complaints to subside in coming days, but warned that other storm-related scams would likely be on the increase.