Thursday, October 2, 2008

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Attorney General Abbott Takes Legal Action Against Hotel, Motel For Price Gouging During Hurricane Ike

HOUSTON – Texas Attorney General Greg Abbott today took legal action against the Hotel Nacogdoches and the Super 8 Brookshire Motel near Katy for unlawfully increasing room rates during Hurricane Ike. According to the state’s enforcement actions, the defendants charged exorbitant rates in an attempt to illegally profit from a declared disaster.

On Sept. 8, Gov. Rick Perry issued a disaster declaration as Hurricane Ike approached Texas. State and federal officials urged Gulf Coast residents to evacuate as soon as possible. An estimated 1.2 million people heeded these warnings and sought lodging in hotels and motels until the storm passed. Under the Texas Deceptive Trade Practices Act, businesses are prohibited from taking advantage of a declared disaster by selling or leasing fuel, food, lodging, medicine or other necessities at an exorbitant rate.

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Nacogdoches

Brookshire
Texas Attorney General's lawsuit against Hotel Nacogdoches
Texas Attorney General's lawsuit against Super 8 Brookshire

“Although Texas law clearly prohibits profiteering during declared disasters, these defendants are charged with increasing room rates for evacuees during Hurricane Ike,” Attorney General Abbott said. “The law imposes strict penalties on vendors that attempt to increase their profits after the governor issues a disaster declaration. Despite today’s price gouging charges, the vast majority of Texas businesses complied with the law and are to be commended for working with authorities to provide crucial assistance to hurricane victims.”

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Price Gouging Complainants

Hotel Nacogdoches is located north of Houston off of IH-59, which was a major evacuation route for coastal residents. According to complaints received by the Office of the Attorney General (OAG), the hotel charged Hurricane Ike evacuees more than double the rate it typically charges for the same rooms under ordinary circumstances. According to guest receipts obtained by state investigators, while Hotel Nacogdoches previously charged $49.99 for Room 103, it charged $99.99 for the same room two days before Hurricane Ike. Witnesses reported that a sign outside the hotel advertised room rates for $49.99; however, when they attempted to check in, customers were told rooms would cost $109.

Super 8 Brookshire Motel, located west of Katy on IH-10, also housed hurricane evacuees. OAG investigators subpoenaed records from the motel, including typical room rate notices posted by the defendants. Documents obtained by the state indicate that Hurricane Ike evacuees were charged up to $125 for a room that ordinarily cost $99.

Both defendants also charged evacuees state and local hotel and motel taxes despite the governor’s declaration waiving those taxes.

The OAG is seeking civil penalties of up to $20,000 per violation and up to $250,000 per violation for victims over 65.

Although Hurricane Ike has left the state, the governor’s disaster declarations are still active, so the OAG continues to have enforcement authority to pursue price gouging complaints. Texans who encounter price gouging should call the hotline at (800) 252-8011. Information collected is relayed directly to agency investigators. Texans may also report other disaster-related scams to the hotline, including home repair scams and charity scams.