Penalties for Violating California Penal Code 396 PC

Criminal Penalties
A violation of Penal Code 396 PC is considered a misdemeanor, punishable by:

• Up to one year in county jail
• A fine of up to $10,000
• Misdemeanor probation

Each instance of price gouging—such as overcharging multiple customers—can be charged as a separate offense, increasing potential penalties.

Civil Penalties & Lawsuits
Businesses and individuals found guilty of price gouging may also face:

• Civil fines of up to $2,500 per violation under California’s Unfair Competition Law
• Consumer lawsuits seeking refunds, damages, and attorney fees
• Injunctions preventing future business operations

Government agencies such as the California Attorney General’s Office, district attorneys, or city attorneys can file civil actions to impose additional fines and seek compensation for affected consumers.

Key Elements of a Price Gouging Charge in California

To obtain a conviction for price gouging under Penal Code 396, the prosecution must establish the following elements beyond a reasonable doubt:

1. A State of Emergency Was Declared
   The alleged price increase must have occurred during or shortly after a state of emergency declared by the governor or local officials.

2. The Defendant Sold or Offered to Sell Goods or Services
   The individual or business must have been engaged in selling or offering for sale essential goods or services covered under the law, such as food, fuel, housing, medical supplies, or emergency services.

3. The Price Increased by More Than 10%
   The prosecution must show that the price exceeded 10% of its pre-emergency cost, unless the defendant can prove that the increase was due to legitimate supplier cost increases.

4. No Valid Justification for the Price Increase
   If the seller cannot provide clear documentation proving that higher costs (e.g., supply chain disruptions, labor costs) justified the price hike, the increase is presumed to be illegal.

5. Intent to Exploit the Emergency (in Some Cases)
   While price gouging laws are generally strict liability offenses (meaning intent is not always required), prosecutors may argue that the defendant knowingly took advantage of the crisis for financial gain.

Price Gouging Examples in California

• Gas Stations Overcharging During Natural Disasters – Several California gas stations were investigated for raising fuel prices by more than 50% following wildfires. Authorities imposed heavy fines and ordered refunds to affected consumers.
• Grocery Stores Inflating Prices During the COVID-19 Pandemic – A chain of local markets faced civil and criminal penalties after increasing the price of essential goods like bottled water, disinfectants, and medical supplies by over 200%.
• Landlords Raising Rent on Displaced Residents – Following an earthquake, some landlords attempted to increase rent by more than 10% for existing tenants and evacuees seeking temporary housing. The Attorney General’s Office took legal action, resulting in fines and injunctions.
• Online Sellers Profiting Off Emergency Supplies – Individuals were prosecuted for selling face masks and hand sanitizers at inflated prices during the COVID-19 emergency. Many were fined, and their listings were removed.

Legal Defenses Against Price Gouging Charges

The Price Increase Was Justified by Higher Costs
If a business raised prices due to increased costs for goods, transportation, or labor, this may serve as a valid defense. Penal Code 396 allows price increases if they are directly tied to a supplier’s price hike rather than an attempt to take advantage of an emergency.

No State of Emergency Was in Effect
Price gouging laws only apply during a declared state of emergency and for a limited period afterward. If the alleged overpricing happened before or after the legally defined timeframe, the charges may not be valid.

The Product or Service Was Not Covered by Price Gouging Laws
Penal Code 396 applies to essential goods and services, including food, fuel, medical supplies, housing, and emergency services. If the item in question does not fall under the statute, the charges may not hold up in court.

The Alleged Price Increase Did Not Exceed Legal Limits
The law prohibits price increases of more than 10% above pre-emergency levels unless justified by increased costs. If the price increase was within legal limits, the case could be dismissed.

Lack of Intent to Overcharge
Price gouging typically involves willful price inflation to exploit a crisis. If a pricing error or miscommunication led to the alleged violation, it may be possible to argue that there was no intent to engage in unlawful business practices

How California Investigates & Enforces Price Gouging Laws

California authorities take price gouging violations seriously and actively investigate businesses and individuals accused of exploiting consumers during emergencies. Law enforcement agencies and consumer protection offices work together to identify and prosecute violators under Penal Code 396 PC. Once an investigation is launched, authorities can file criminal or civil charges based on the evidence.

Some of the primary ways price gouging is investigated include:

Consumer Complaints – The California Attorney General’s Office, district attorneys, and local agencies rely on reports from consumers who suspect unlawful price increases.
Market Monitoring – Government agencies track price fluctuations on essential goods, especially after a declared emergency.
Undercover Operations – Law enforcement may conduct sting operations or visit stores in response to complaints.
Business Audits & Subpoenas – Prosecutors can subpoena records, invoices, and supply chain documents to determine if a price increase was justified.

Contact a Los Angeles Criminal Defense Attorney for Price Gouging Charges

If you are facing price gouging charges in Los Angeles, the consequences can be severe. A conviction could result in criminal penalties, civil lawsuits, and damage to your business and reputation. Prosecutors aggressively pursue these cases, and waiting to act could limit your legal options.

With over 20 years of experience, Attorney Hashemi has successfully defended business owners and individuals against complex criminal charges. Our firm understands how these cases are prosecuted and will work to challenge weak evidence, protect your rights, and fight for a dismissal or reduced penalties.

Time is critical. The longer you wait, the harder it becomes to build a strong defense. Contact The Law Offices of Arash Hashemi today for a free consultation and take the first step in protecting your future.

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