New Jersey warns of current price gouging law and potential fraud over sale of infant formula

New Jersey

As manufacturers and government officials continue to take action to ease infant formula shortages, Acting Attorney General Matthew J. Platkin and the Consumer Affairs Division today warned merchants and consumers against price gouging and potential fraud regarding the sale of infant formula in New Jersey.

New Jersey’s price gouging law went into effect when Governor Murphy signed Executive Order No. 296 on May 17 to address the formula supply shortage in the state.

The state of emergency limits excessive price increases and prohibits certain unreasonable business practices during the declared state of emergency and for 30 days after it ends.

An excessive price increase is any price greater than 10% of the price at which the product or service was sold in the normal course of business before the state of emergency.

“The current infant formula shortage may have scam artists and unscrupulous salespeople coming out of the woods to take advantage of parents at a vulnerable time,” Acting Attorney General Platkin said.

“We are letting merchants know that we are ready to act and hold accountable those who exploit any crisis for financial gain.”

Price gouging violations are subject to civil penalties of up to $10,000 for the first violation and $20,000 for the second and subsequent violations.

Violators may also be required to pay consumer restitution, attorneys’ fees and investigation costs and may be subject to an injunction. Each individual sale of goods is considered a separate and distinct violation.

To date, the Division has received around 16 consumer complaints – around half of these were received after the declaration of the state of emergency – alleging price gouging related to the supply or sale of formulas for infants.

In addition to reviewing these complaints, the Division is aware of reports of online scams and instances of monitoring thereof affecting New Jersey consumers and the possibility that infant formula may not be permitted to be sold in the State or that expired preparations come on the market.

“As we continue to investigate alleged price gouging reports and other questionable tactics, we are asking consumers to help us by reporting the excessive prices and scams they see when purchasing infant formula” , Cari Fais, acting director of the Consumer Affairs Division, mentioned.

“The Division stands ready to take action against violators, but when it comes to consumer protection, New Jerseyans can also take an active role in stopping price gouging and fraud.”

For example, consumers should be wary of in-store or online advertisements for overpriced infant formula or offers that require payment by bank transfer and may not deliver any product.

The Division also recommends that consumers take the following precautions:

  • Use known and reputable merchants: enter the business address directly rather than clicking on a link sent to you. Make sure websites aren’t fraudulent by checking that they’re using the correct spelling of a business name, have working customer service numbers, and have an actual mailing address rather than a post office box.
  • Do research before you buy. Learn more about the merchant or product by typing the name and the words “scam”, “complaint” or “review” into a search engine, and suspect any business with only positive reviews, as they might have be paid or manipulated.
  • Check the expiration date and the packaging. Parents are urged to pay close attention to expiration dates and packaging to ensure the formula has not expired and has not been tampered with.
  • Beware of some foreign distributors. Many infant formulas available outside the United States are safe, but some may not meet federal nutrient requirements. In response to the shortage, the FDA changed its guidelines to increase supplies. Visit the FDA website for consumer questions and answers about infant formula.
  • Consult a pediatrician first. Parents who are considering buying a new brand of formula or making homemade formula are advised to consult with their infant’s health care provider first.

Those who believe price gouging is occurring are encouraged to file complaints online – where photos, receipts and other evidence of price gouging can be uploaded – or call 1-800-242-5846 to receive a complaint form by mail.

Consumers are also encouraged to report any potential scams they encounter by visiting the Division’s website.

For Department of Health guidance and other information on the state’s efforts to address the national infant formula shortage, visit nj.gov/babyformula.

Additionally, New Jersey’s Anti-Discrimination Act (LAD) provides protections for families who may need to rely more on breastfeeding during formula shortages.

The LAD requires employers to provide reasonable accommodations for pregnancy, childbirth, related medical conditions and breastfeeding to enable individuals to continue working while maintaining a healthy pregnancy or to return to work after childbirth.

Employers cannot in any way penalize or retaliate against employees for requesting or using accommodation for pregnancy or breastfeeding.

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