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Law360 (October 6, 2020, 5:02 PM EDT ) The COVID-19 pandemic has brought new compliance risks and considerations for companies and individuals. In this Expert Analysis series, state attorneys general share their enforcement priorities.
Tom Miller
With little warning, the skies turned dark in the middle of the day on Aug. 10. Winds reaching speeds as high as 140 mph ripped through Iowa, toppling trees, destroying roofs, flattening millions of acres of crops and leaving a million people without power.
My home in Des Moines lacked power for almost a week — and I was one of the fortunate ones. Weeks later, Iowans are still repairing homes and removing downed trees, all while dealing with a spike in COVID-19 cases.
In Iowa, we're somewhat used to tornadoes and floods. But we've never seen something that moved so quickly and did so much damage over a wide swath of the state. It was a derecho — a straight-line windstorm often referred to as an "inland hurricane."
Many state attorneys general are dealing with multiple disasters right now: wildfires, storms, civil unrest and other challenges on top of a pandemic that drags on. Slow-moving or fast, these disasters bring out scammers, charlatans and others who prey on victims. These emergencies underscore the need for states to have robust consumer protection mechanisms in place for whatever comes their way.
COVID-19 prepared us for the derecho in many respects. As did many AG offices, we received a huge increase in price-gouging complaints and other calls from consumers during the first three months of the pandemic.
This caused our Consumer Protection Division to streamline its processes to react even more quickly than usual. For example, we created a new complaint form for price-gouging, to help investigators get all the relevant information from consumers.
We needed all hands on deck — but to keep everyone safe, we needed those hands to work remotely. That meant setting up frequent conference calls and other ways to communicate so intake staffers, investigators and attorneys could collaborate and sift through the flood of information.
Here are some other lessons we learned from our double disasters:
Get the word out early and often.
Anticipating problems we had seen in other disasters, we sent a press release the day after the derecho warning residents to watch out for "storm chasers" — contractors who head to these areas to persuade storm victims to hire them on the spot for cleanup and repair work.
Our staff did multiple interviews with the media, and used social media to warn and educate consumers. Sure enough, we soon heard reports that out-of-state tree trimmers and other contractors were knocking on doors and charging exorbitant prices.
Stop the harm.
As during COVID-19, we reached out to sellers immediately — whether those sellers were on eBay Inc. or other online marketplaces or at traditional brick-and-mortar stores.
We were able to get retailers and sellers to take down internet sale postings that appeared to be price-gouging, to reduce prices and even to remove questionable products from their shelves, addressing the complaints before they increased.
Whether consumers were in dire need of toilet paper or electric generators, our goal was to stop profiteers and help constituents get the goods they needed without being charged exorbitant prices.
Shift resources.
We reassigned investigators and attorneys temporarily to handle spike in disaster-related complaints. This proved helpful to share knowledge among the staff.
For example, our experts in agriculture antitrust issues were able to help when consumers complained of rising prices of meat and eggs.
Go to the people affected.
The derecho pummeled Cedar Rapids, where about 40,000 people still lacked power a week after the storm, and where cleanup continues even today.
The city is about 130 miles away from our state capital, so an investigator set up a mobile office with the assistance of city staff. I also visited Cedar Rapids to send the message that our office was there to help.
Watch for unusual business practices.
After the derecho, we had several complaints about electrical contractors charging an "emergency service fee" of $300, just so a consumer could secure an appointment. These types of complaints lead our team to review a company's practices before and after a disaster to determine if a change in business practices is really an attempt to charge higher prices during an emergency.
Monitor social media.
Consumers love to share stories of scams and price-gouging on social media, but they won't necessarily report it to authorities. For example, we monitored the "Iowa Derecho Storm Resource Page" on Facebook to learn about complaints, and we used the forum to educate consumers, provide online complaint forms and post guidelines for hiring contractors during a disaster.
Work with partners.
We couldn't have done it alone. Local law enforcement, state homeland security officials, the AARP and other entities helped us reach people who were vulnerable.
Tap experts.
We learned quickly while investigating price-gouging that we needed experts to help us better understand some industries' supply chains and business practices. These included home improvement contractors, market economists, skilled technicians and others who could offer advice on markets and pricing.
Maintain contact with businesses.
During COVID-19, we were in regular contact with the corporate counsel for major retailers and supermarkets to address price-gouging complaints and preemptively avoid problems — such as the sale of suspect KN95 masks.
As new issues arose during the pandemic and post-derecho, the lines of communication were already open to quickly resolve issues.
Work with other AGs.
Back in March, we joined with 32 other attorneys general to urge Amazon.com Inc., Facebook Inc., eBay, Walmart Inc. and Craigslist to more rigorously monitor online price-gouging practices. This paid off in helping us track down complaints not only during the pandemic, but also when excessively priced goods showed up after the derecho.
AG offices also compared notes and shared resources on common issues, such as allegations of price-gouging at big-box retailers. Additionally, we took advantage of the great tools and training offered by the National Association of Attorneys General.
Look at legislation.
Our price-gouging rule was adopted in the wake of Iowa's historic floods of 1993, and it has held up well under entirely different types of disasters. It helps disaster victims get necessary goods while allowing business to make a reasonable profit.
Now is a great time, however, to reexamine our consumer protection laws to ensure they are serving constituents. For example, we've asked legislators for years to strengthen laws to address fraud by home-improvement contractors. As more people repair damage from storms, it may be time to make another push.
Be aware that regular scams will continue.
As regulators, we cannot let emergencies consume our attention. Even though much of the economy was shut down, non-price-gouging complaints fell less than 10% during the first three months of the pandemic.
Consumers still came to us with concerns about impostor scams, robocalls, car repairs, housing problems and other run-of-the-mill complaints. Bad actors hope they can hide while our attention focuses on other areas. They're wrong.
I'm proud of our great Consumer Protection Division, and their tireless efforts to help Iowans. We know that our work is far from over.
As Iowans clean up and piece their lives back together, the economic and emotional stresses will persist. We will be on their side — and will use the law to help make their lives better, no matter what storms come their way.
Tom Miller is the attorney general of Iowa, and the longest-serving state attorney general in U.S. history.
The opinions expressed are those of the author and do not necessarily reflect the views of Portfolio Media Inc. or any of its respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
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