California Price Gouging Laws: 10% Cap, Penalties, and Reporting

Under California’s price gouging law, once the President, the Governor, or a local official declares an emergency, sellers cannot charge more than 10% above their pre-emergency prices for essential goods, services, and housing. The rule is set out in Penal Code Section 396 and applies to sales made in stores, in person, and online. Violations are misdemeanors punishable by up to a year in county jail and a fine of up to $10,000.¹

When the Protections Turn On

The 10% cap is not always in force. It activates only when the President, the Governor of California, or a local authority empowered to declare emergencies in a city, county, or city and county issues a formal declaration.¹ No declaration, no protection. A disaster that has not yet been formally declared falls outside the statute.

Once triggered, the protections run for different periods depending on what is being sold:

30 days for most consumer goods, emergency supplies, fuel, housing, hotels, and storage or transportation services.
180 days for repair, reconstruction, and emergency cleanup services provided by contractors.

The Governor, the Legislature, or a local governing body can extend any of these periods if the emergency persists, and extensions are common in major disasters.²

What the Law Covers

The statute reaches a broad range of essentials that people need during and after a disaster, grouped into categories:¹

Food and consumer goods, including groceries and beverages.
Emergency supplies such as batteries, flashlights, candles, and temporary shelters.
Medical supplies, including prescription and over-the-counter medications and first aid items.
Building materials such as lumber, plywood, and drywall.
Fuel, including gasoline, diesel, and home heating oil.
Housing, including hotel and motel rooms, short-term and long-term rentals, and mobilehome park spaces.
Services including transportation, freight, storage, and contractor services for repair, reconstruction, or emergency cleanup.

The law explicitly applies to goods and services sold online, not just at physical stores. Reselling bottled water at inflated prices on an e-commerce platform during an emergency carries the same exposure as marking up prices at a brick-and-mortar location.¹

How the 10% Cap Is Calculated

Once an emergency is declared, you cannot charge more than 10% above the price you were actually charging immediately before the declaration, or before a specific date set in the declaration itself.¹ A case of bottled water sold for $5 the day before the declaration can be sold for no more than $5.50 during the protected period.

Sellers who did not offer the product or service before the emergency work from a different formula. Their price cannot exceed 50% above their own wholesale cost, as defined by California’s Business and Professions Code.¹ If you paid $200 for a generator, the most you can charge is $300. This closes off the buy-at-retail-and-flip strategy.

Housing, Rentals, and Evictions

Housing gets its own treatment because displacement is one of the fastest consequences of a disaster.

Hotel and motel operators cannot raise rates more than 10% above the regular rates they were advertising immediately before the declaration.¹

For rental properties, the baseline is the actual rent a tenant was paying, or the most recent price advertised or offered to a prospective tenant before the declaration. Rent cannot go more than 10% above that number during the protected period.² The rule covers apartments, single-family homes, and spaces in mobilehome parks or campgrounds with initial lease terms of a year or less.³

The price gouging law does not override local rent control ordinances. Where a rent control law sets a lower cap than the 10% allowed under the emergency statute, the rent control cap still governs.³

The statute also blocks a common workaround. During the protected period, it is illegal to evict a residential tenant and then rent the unit to someone else at a price higher than what the evicted tenant could have been charged under the law.² Two limits apply. The law does not block evictions that were lawfully started before the declaration, and it does not stop a landlord from evicting for a legitimate legal reason under California’s standard unlawful detainer process, such as nonpayment of rent or a lease violation.¹ What the statute prohibits is using an emergency as cover to swap tenants for higher-paying ones.

When a Higher Price Is Legal

The 10% ceiling is not absolute. A seller can charge more when the increase is directly tied to higher costs the seller actually incurred because of the emergency, and the burden of proof sits entirely with the seller.¹

Even then, the law still caps the total. A seller passing through emergency-related cost increases can price the item at no more than 10% above the new cost plus the normal pre-emergency markup.¹ If a supplier raises the price of plywood by 20% because of supply chain disruptions, that cost can be passed through, but no additional profit can be layered on top.

Landlords have a parallel exception focused on property improvements. Rent can go above 10% if the increase reflects the cost of substantial repairs or additions beyond routine maintenance, spread across the lease term. A pre-existing rent increase that the tenant contractually agreed to before the declaration is also permitted.³

Penalties

A violation is a misdemeanor. Criminal penalties include up to one year in county jail, a fine of up to $10,000, or both.¹ A price gouging violation is also an unfair business practice under California’s broader consumer protection statutes, which opens the door to civil enforcement. Civil actions can produce injunctions, restitution to affected consumers, and additional civil fines per violation.²

How to Report a Violation

If a business is charging illegally inflated prices during a declared emergency, you have two main reporting options. File a complaint with the California Attorney General’s Office using the online consumer complaint form.⁴ If the conduct amounts to fraud or a crime, reporting it to your local district attorney or city attorney is the more direct route to criminal prosecution.⁵

Document everything. Keep receipts showing the inflated price, save screenshots of online listings, and note what the same item cost before the emergency. That evidence is what investigators use to build a case, and it is what a seller will have to rebut if they claim the increase reflected legitimate costs.

1
California Legislative Information. California Penal Code 396 – Price Gouging
2
California Legislative Information. California Penal Code PEN 396 – Price Gouging
3
California Governor’s Office of Emergency Services. Price Gouging
4
State of California Department of Justice. Consumer Complaint Against a Business or Company
5
State of California Department of Justice. Protecting Consumers