Wilson Drops Opposition to Price-Gouging Bill

Signaling a reversal of its earlier stance, the Wilson Administration has withdrawn opposition to a bill outlawing the type of widespread price gouging that surfaced following the Northridge earthquake.

The state Department of Consumer Affairs said last week the governor’s office supported the department’s opposition to a bill by Assemblyman Richard Katz (D-Sylmar) limiting price increases to 10% for one month following a disaster.

Taking a position criticized by consumer advocates, the department said businesses should be able to raise prices by 50% to recoup financial losses suffered in an earthquake, flood, fire, riot or other serious calamity.

But Wednesday--in the wake of charges by the Consumers Union that the Wilson Administration was more interested in protecting businesses than consumers--the Department of Consumer Affairs said it now supports the legislation.

“In further examination of the bill, we’ve decided that the 10% is just fine,” said Louis Bonsignore, department spokesman.

“This is something that we all want to see passed,” Bonsignore said. “We want a good strong anti-price gouging bill in the state of California. Quite frankly, it’s just a necessity.”

Consumers Union spokeswoman Mariko Takayasu said: “They were wrong on this issue right from the beginning, and I’m glad they’ve come to their senses. It was bad public relations on their end.”

The Katz bill was one of two price-gouging measures the Senate Judiciary Committee passed Tuesday night, sending them on to another committee for further scrutiny.

The second bill, by Assemblywoman Marguerite Archie-Hudson (D-Los Angeles), gives added protection to homeowners approached by contractors who go door-to-door drumming up business.

Bonsignore said his department will be satisfied with two changes Katz has indicated he will make in his measure. First, the department seeks a reduction in the proposed penalties for price gouging from $10,000 to a range of $1,000 to $10,000; second, the department seeks to eliminate a portion of the bill calling for the automatic license revocation of contractors who violate the proposed law.

Meanwhile, Gov. Pete Wilson’s office sought to distance Wilson from the Department of Consumer Affairs stance on the bill.

“There have been no decisions made,” said Sean Walsh, spokesman for Wilson. “Not until we see where the legislation ends up and the governor has had a chance to review it will a position be taken.”