Price-Gouging Charges After the Fires

Introduction to the Problem

California Atty. Gen. Rob Bonta accused real estate agent Iman Shaghyan this week of increasing the price of a Beverly Hills rental by more than 30% in the days after the Jan. 7 fires. It’s the fourth charge Bonta has filed since price-gouging rules went into effect that prohibit rent hikes of more than 10% after a natural disaster.

The Government’s Response

“Profiting off Californians’ pain through price gouging is illegal and I will not stand for it,” Bonta said in a news release. In the weeks after the fires, city officials vowed to crack down on violators as thousands of complaints poured in, with some organizers even compiling spreadsheets documenting the skyrocketing rents. Bonta enlisted teams of lawyers to evaluate complaints, and his office has primarily targeted real estate agents.

Criticisms of the Government’s Efforts

But some critics claim that government officials aren’t doing enough to address the rampant price gouging that appeared across the region in the wake of the fires, saying that the charges filed represent only a small fraction of the complaints submitted to the city and state. “More needs to be done,” said Chelsea Kirk, co-founder of the activist organization the Rent Brigade. “It’s been de-prioritized, and all discourse from elected officials and the press around rent gouging has ended.”

Lack of Transparency

Kirk’s organization checks Zillow for examples of price gouging and said there are currently more than 10,000 active listings that qualify. Her team submits weekly reports to government officials but said transparency is a problem since no one knows exactly what is being investigated. As a result, her team worked with L.A. City Councilmember Hugo Soto-Martínez to draft a motion that, if passed, would require L.A. City Atty. Hydee Feldstein Soto to produce monthly reports detailing the total number of price-gouging complaints received, response times and enforcement actions. The motion has been introduced but not yet placed on the agenda.

Ongoing Investigations and Charges

In addition to Shaghyan, Bonta filed charges in January against La Cañada Flintridge agent Mike Kobeissi and Glendale agent Lar Sevan Chouljian. In February, he charged Hermosa Beach agent Willie Baronet-Israel as well as Edward Kushins, the landlord of the property. All four cases are active. If convicted, the maximum penalty for the misdemeanor could result in a year in prison and a fine of $10,000.

State and City Efforts

In addition to the charges, state Department of Justice officials said they have sent out more than 750 warning letters to hotels and landlords accused of price gouging. The department also is investigating fraud, scams and low-ball offers on burned properties. Bonta is investigating on behalf of the state and Feldstein Soto is filing lawsuits on behalf of the city. So far, she’s been targeting more than just real estate agents.

Lawsuits Against Companies

In February, Feldstein Soto’s office sued rental giant Blueground, citing more than 10 cases of price gouging. In one instance, Blueground allegedly jacked up the rent of a downtown L.A. apartment by 56% on Jan. 7, the day of the fires. In March, Feldstein Soto’s office sued a group of homeowners and companies for $62 million, citing not only price-gouging violations but also violations of the city’s short-term rental ordinance, which places restrictions on rentals such as Airbnbs.

Conclusion

The issue of price gouging after the fires remains a significant concern, with critics arguing that more needs to be done to address the problem. While the government has filed charges and sent warning letters, the lack of transparency and the perceived lack of urgency are hindering efforts to combat price gouging. As the price-gouging rules are set to expire July 1, it remains to be seen whether the government will take further action to protect Californians from exploitative practices.

FAQs

1. What is price gouging, and how is it defined in California?
   Price gouging refers to the practice of increasing prices excessively during a state of emergency, such as after a natural disaster. In California, price-gouging rules prohibit rent hikes of more than 10% after a natural disaster.
2. How many charges have been filed by California Atty. Gen. Rob Bonta?
   Bonta has filed four charges since price-gouging rules went into effect.
3. What is the maximum penalty for price gouging in California?
   The maximum penalty for the misdemeanor could result in a year in prison and a fine of $10,000.
4. Are there any ongoing investigations or lawsuits related to price gouging?
   Yes, the state Department of Justice is investigating fraud, scams, and low-ball offers on burned properties, and the L.A. City Atty. Hydee Feldstein Soto is filing lawsuits on behalf of the city.
5. When are the price-gouging rules set to expire?
   The price-gouging rules are set to expire July 1.