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

California’s price gouging law, Penal Code Section 396, caps prices on essential goods, services, and housing at 10% above their pre-emergency level once the President, the Governor, or a local official declares an emergency. It covers groceries, fuel, medical and emergency supplies, building materials, hotels, rentals, and contractor services, whether sold in a store, online, or in person. Violations are misdemeanors punishable by up to a year in county jail and a $10,000 fine.¹

When the Protections Are Active

The cap is not always in force. It switches on only when the President, the Governor of California, or a local authority formally declares an emergency in a city, county, or city and county.¹ A disaster that has not yet produced a declaration falls outside the statute, even if the harm on the ground is obvious.

Once a declaration is in place, the default protection periods are:

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, and extensions are common in major disasters. After the January 2025 Los Angeles wildfires, Governor Newsom issued executive orders extending protections for rental housing, hotels, building materials, and reconstruction services well past the default windows.²

What the Law Covers

The statute groups covered items into categories rather than listing specific products:¹

Food, beverages, and other consumer goods.
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.
Transportation, freight, storage, and contractor services for repair, reconstruction, or emergency cleanup.

Online sales count. Reselling bottled water at inflated prices on an e-commerce platform during a declared emergency exposes the seller to the same prosecution as a physical retailer doing the same thing.¹

How the 10% Cap Is Calculated

For items a business was already selling, the ceiling is 10% above the price it was actually charging immediately before the emergency, or before a specific date set in the declaration itself. A case of bottled water selling for $5 the day before the declaration cannot be sold for more than $5.50.¹

A different formula applies to sellers offering something they did not sell before the emergency. Their price cannot exceed 50% above their own wholesale cost, as defined in California’s Business and Professions Code.¹ Someone who buys a generator at $200 cannot resell it for more than $300.

Hotels, Rentals, and Eviction Protections

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

For rental housing, the baseline is the rent the current tenant was paying, or the most recent price advertised or offered to a prospective tenant before the declaration. The cap applies to apartments, single-family homes, and spaces in mobilehome parks or campgrounds with initial lease terms of one year or less. Local rent control ordinances still apply. Where a local rent cap is lower than the state’s 10% ceiling, the lower local cap controls.³

The law also closes a common workaround. During the protected period, a landlord cannot evict a residential tenant and then re-rent the unit at a price higher than what the evicted tenant could have been charged under the statute.⁴ Two limits are worth knowing. Evictions that were lawfully started before the declaration are not blocked, and landlords can still pursue standard unlawful detainer actions for legitimate reasons such as nonpayment of rent or lease violations.¹ What the statute prohibits is using the emergency as cover to swap tenants out for higher-paying ones.

When a Higher Price Is Legal

The 10% ceiling can be exceeded if the seller can prove the increase is directly tied to higher costs the seller actually incurred because of the emergency. The burden of proof is on the seller.¹

Even then, the price is still capped. A seller passing through emergency-related cost increases can charge no more than 10% above the new cost plus the seller’s normal pre-emergency markup.¹ If a supplier raises plywood prices 20% because of supply chain disruptions, the retailer can pass that through but cannot layer extra profit on top.

Landlords have an analogous exception for property improvements. Rent can rise above 10% to reflect the cost of substantial repairs or additions beyond routine maintenance, spread over the lease term. A pre-existing rent increase the tenant contractually agreed to before the declaration is also allowed.³

Penalties for Violations

A violation is a misdemeanor punishable by up to one year in county jail, a fine of up to $10,000, or both.¹ The same conduct also counts as an unfair business practice under California’s consumer protection statutes, which allows civil enforcement through injunctions, restitution to affected consumers, and additional civil fines per violation.⁴

How to Report a Violation

You have two main paths. File a complaint with the California Attorney General’s Office using the online consumer complaint form.⁵ For conduct that looks like fraud or a crime, reporting to your local district attorney or city attorney is the more direct route to criminal prosecution.⁶

Document the violation before you report it. Keep receipts showing the inflated price, screenshot online listings, and note what the same item cost before the emergency. That evidence is what investigators need, and it is what the seller will have to rebut if they claim the increase reflected a legitimate rise in their own costs.

1
California Legislative Information. California Penal Code 396 – Price Gouging
2
Office of Governor Gavin Newsom. Governor Newsom Issues Executive Order Expanding Protections for Survivors and Support for Businesses
3
California Governor’s Office of Emergency Services. Price Gouging
4
California Legislative Information. California Penal Code PEN 396 – Price Gouging
5
State of California Department of Justice. Consumer Complaint Against a Business or Company
6
State of California Department of Justice. Protecting Consumers