State has $40K settlement with Gowanus hotel for price-gouging in wake of Sandy

Gowanus-area hotel overcharged 38 guests

October 24, 2013 NY State Attorney General's Office
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New York State Attorney General Eric T. Schneiderman on Thursday announced a settlement of more than $40,000 with MMG Butler Street LLC, a Delaware-based corporation that operates the Holiday Inn Express hotel at 279 Butler St. in Gowanus. 

After receiving a consumer complaint, the Attorney General’s Office found that the hotel charged guests excessive rates for last-minute room reservations in the wake of superstorm Sandy, in violation of New York State’s price gouging law. Under the terms of the settlement, the hotel has paid $15,315 in restitution, which is being distributed to 38 victims. The hotel has also paid a $25,000 civil penalty to the State of New York.

“At a time when people desperately needed shelter in the days after Hurricane Sandy, the Holiday Inn Express overcharged them — taking advantage of its own guests, including New Yorkers and visitors to New York, in violation of state price gouging laws,” Attorney General Schneiderman said.

New York State’s Price Gouging Law (General Business Law § 396-r) prohibits merchants from taking unfair advantage of consumers by selling goods or services for an “unconscionably excessive price” during natural disasters. The price gouging law covers New York State vendors, retailers and suppliers. The law specifically says that a price may be considered excessive if there is a “gross disparity” between the prices charged immediately before and after the emergency.

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Following Superstrom Sandy, many metropolitan-area hotels were forced to close because of flooding and power outages. Stranded tourists and displaced residents found themselves competing for the few remaining hotel rooms. Most area hotels that were still operational quickly filled to capacity, but they charged guests at their normal rates. However, this Holiday Inn Express drastically increased its rates for guests seeking last-minute reservations, according to the Attorney General’s Office.

One week prior to the storm, the average room rates at the Holiday Inn Express ranged from $155 to $170 per night. However, when the storm struck New York, the hotel charged the 38 guests more than $400 a night, and 15 of them were charged more than $500.

Because there can be seasonal and business-driven fluctuations in hotel pricing during non-emergency times, restitution in this case is limited to 38  guests who were charged more than $400 per night for stays between Oct. 30 and Nov. 2, 2012.

Brooklyn’s Assemblywoman Joan Millman said, “New York law prohibits price gouging during a state of emergency — and Sandy put us all in a state of emergency. I commend Attorney General Schneiderman for pursuing those who took advantage of their neighbors in the wreckage that the storm left behind.”

Since the October 2012 storm, the Attorney General’s Office has zeroed in on price gouging and obtained almost $300,000 in penalties and costs from 43 downstate gas stations that engaged in illegal price gouging after the storm.

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