Senator Elizabeth Warren believes price gouging is mainly why prices are rising, her and other fellow politicians have introduced legislation they say will help

Washington, D.C. – United States Senators Elizabeth Warren (D-Mass.), Tammy Baldwin (D-Wisc.), and Bob Casey (D-Pa.) and Rep. Jan Schakowsky (D-Ill.) reintroduced the Price Gouging Prevention Act of 2024, which they say would protect consumers and prohibit corporate price gouging. The bill would authorize the Federal Trade Commission and state attorneys general to enforce a federal ban against grossly excessive price increases, regardless of a seller’s position in a supply chain. 

According to Warren’s Office, the legislation would crack down on major companies that brag about exploiting American consumers or exercise unfair leverage while jacking up prices. It would also protect small businesses that raise prices in good faith. Additionally, the bill would reportedly ensure that when there are major shocks to the market, public companies disclose changes in their pricing strategies in their filings with the Securities and Exchange Commission.  

“Giant corporations are squeezing American families for fatter profits. It’s time to give the Biden administration stronger tools. Senate Democrats and I are renewing our push for a new law to crack down on corporate price gouging,” said Senator Warren.

“Big corporations are price gouging Americans, taking in record profits, and giving their executives lavish bonuses, all while Wisconsin families struggle to get by. It’s wrong and we need to do more to hold these big corporations accountable and give Wisconsinites some breathing room,” said Senator Baldwin. “I am proud to lead this legislation to bring some basic transparency when Americans see rapid price hikes and help stop those at the top of the food chain from exploiting crises to stick families with exorbitant prices.”

“Corporations are raising the prices of everyday household items to rake in record profits at the expense of Pennsylvania families,” said Senator Casey. “Our bill will crack down on greedflation by finally prohibiting price gouging and holding corporations accountable for raising costs excessively. It is long past time we take on big corporations and lower costs for families.”

“As large grocery chains continue to rake in record profits, there are many families struggling to put food on the table. The cost of basic groceries has jumped by 25% over the past four years. Price gouging is harming consumers and is fueling the elevated profit margins among greedy corporations. We live in the richest country in the world at the richest moment in history. Yet, many Americans are unable to feel the full magnitude of our wealth,” said Congresswoman Jan Schakowsky. “Our bill empowers the FTC to hold these price gouging companies accountable when they take advantage of American consumers. People must always come before profits.”

During the COVID-19 pandemic, some corporations were accused of taking advantage of the crisis to prey on consumers by “price gouging”: raising prices by even more than necessary to cover increases in their costs, and hiding behind inflation and supply chain disruptions to do it.

Warren’s Office argued that now that the market shock of the pandemic has largely abated, corporations’ costs are coming down and profits are rising. But for Americans, prices remain high. Warren believes that price gouging is the cause and referenced the following statistics.

“Prices for consumers have risen by 3.4 percent over the past year, but producers’ input costs have risen only 1 percent. Take diapers: prices for wood pulp, the main input for diapers, declined by 25 percent last year, yet parents are still paying higher and higher prices for diapers. For many commodities and services, the cost of production has actually decreased. Meanwhile, unchecked consolidation across nearly all sectors of the economy has enabled dominant players to boost prices with few consequences, disincentivizing new entrants and harming consumers. Research shows that price gouging can—and does—occur even in the absence of a market shock.”

This legislation is co-sponsored by Senators Tammy Baldwin (D-Wisc.), Bob Casey (D-Pa.), Bernie Sanders (I-VT), Sheldon Whitehouse (D-RI), Jeff Merkley (D-OR), Ed Markey (D-Mass.), and Richard Blumenthal (D-Conn.). In the House of Representatives, this legislation was introduced by Rep. Jan Schakowsky (D-IL) and is co-sponsored by Rep. Eleanor Holmes Norton (D-DC), Hank Johnson (D-GA), Ro Khanna (D-CA), Jerry Nadler (D-NY), Mary Gay Scanlon (D-PA), Paul Tonko (D-NY) and Katie Porter (D-Calif.) 

According to Warren’s Office, The Price Gouging Prevention Act would:

• Prohibit price gouging at the federal level – anytime and anywhere. The proposed bill would clarify that price gouging is an unfair and deceptive practice under the FTC Act. It would allow the FTC and state attorneys general to stop sellers from charging a grossly excessive price, regardless of where the price gouging occurs in a supply chain or distribution network. 
• Create an affirmative defense for small businesses acting in good faith. Small and local businesses sometimes must raise prices in response to crisis-driven increases in their costs because they have little negotiating power with their price-gouging suppliers. This affirmative defense protects small businesses earning less than $100 million from unjustified litigation if they show legitimate cost increases.  
• Target dominant companies that have exploited the pandemic to boost profits. The bill would create a rebuttable presumption of price gouging against firms that exercise unfair leverage and companies that brag about increasing prices during periods of inflation. 
• Require public companies to clearly disclose costs and pricing strategies. During periods of exceptional market shock, the bill requires public companies to transparently  disclose and explain changes in their cost of goods sold, gross margins, and pricing strategies in their quarterly SEC filings. 
• Provide additional funding to the FTC. The bill appropriates $1 billion in funding to  the FTC to carry out its work.