33 Attorneys General have a plan to end price gouging online
PHILADELPHIA-- Thirty-three Attorneys General are fed up with price gouging during the novel coronavirus pandemic. And now they have set their sites on major online marketplaces that are enabling absurd prices on everything from hand sanitizer to thermometers to food.
In a letter sent to Amazon, Craigslist, eBay, Facebook and Walmart, the letter drafted by Pennsylvania Attorney General Josh Shaprio and signed by a bipartisan contingent of Attorneys General notes the damage from price gouging goes beyond the financial. They wrote, “When consumers cannot get what they need to protect their homes and loved ones--or in this case, help prevent the spread of the virus--consumers not only economic harm, but serious health consequences as well.”
The same day the letter was posted, a common oral thermometer was for sale on Amazon for more than $500. A past analysis by U.S. PIRG Education Fund found the majority of surveyed surgical masks and hand sanitizer saw prices spikes of more than 50% since the World Health Organization declared a public health emergency at the end of January.
These problems have appeared elsewhere as well. NBC Bay Area found single packs of toilet paper for sale ranging from $34-$49. Usually, they retail for just a few dollars. The Attorneys General letter lists other examples from March including two-liter bottle of hand sanitizer for $250 on craigslist, an eight-ounce bottle sold for $40, and a pack of face masks being sold for $40 and $50 on eBay.
During emergencies, the anti-price gouging laws in many states are triggered. These laws prohibit price increases that prey on a population's need and fear to sell items at exorbitant prices. While the laws vary by state, such increases are usually limited to 10%-25% plus any additional costs for production, delivery or supplies. Beyond that, it is considered profiteering.
“Ripping off consumers by jacking up prices in the middle of a public emergency is against the law and online resellers like Amazon must join in this fight,” said Attorney General Josh Shapiro in his letter. “These companies form the backbone of online retail and have an obligation to stop illegal price gouging now and put strong practices into place to stop it from happening in the future.”
Amazon, and the other marketplaces, use a mixture of algorithms, self-reporting and other tools to monitor their marketplace for price gouging. When an item is flagged it may be removed. Repeat offenders can be band. Many online marketplaces have taken action to end price gouging. Earlier this week, Amazon banned 3,900 sellers for “violating [our] fair pricing policies.”
But the letter contends the “whack-a-mole” approach leaves consumers at risk because absurdly priced critical supplies continue to slip through. Instead, the Attorneys General wants a more proactive approach including,
Set policies and enforce restrictions on unconscionable price gouging during emergencies: Online retail platforms should prevent unconscionable price increases from occurring by creating and enforcing strong policies that prevent sellers from deviating in any significant way from the product’s price before an emergency. Such policies should examine historical seller prices, and the price offered by other sellers of the same or similar products, to identify and eliminate price gouging.
Trigger price gouging protections prior to an emergency declaration, such as when your systems detect conditions like pending weather events or future possible health risks.
Implement a complaint portal for consumers to report potential price gouging.
“Online resellers have built advanced platforms and now it’s time to take that talent and help us beat COVID-19 by ensuring ready access to essential goods at fair prices,” said Attorney General Shapiro. “These are a few potential solutions, and we know each of your companies have the ability to implement other ways to protect American consumers during public emergencies. We look forward to working with you to enforce current statutes on price-gouging and implement these reforms.”
While these problems continue, consumers should remain wary when shopping online and offline during the pandemic.
How do I spot price gouging?
1) Extraordinarily high prices: Businesses are allowed to increase prices for critical supplies during an emergency, but they are NOT allowed to raise the price of products excessively to take advantage of the current pandemic. While laws vary by state, increases over 20% may be considered price gouging.
2) Price Comparison Between Similar Products: Some state laws, prohibit significant increases in prices as compared to other products. For instance, if one hand sanitizer is priced at double the cost of similar products, that may violate price gouging laws.
3) Err on the side of caution: If you aren’t sure whether a product is priced too high, it’s better to report problematic items to the company and your Attorney General.
What do I need to report price gouging?
You should report any potential price gouging to your state Attorney General. You will generally need:
The name of the store/vendor where you saw the item and their address.
Product details, including, but not limited to, the product type, brand, size, and price
The date, time, and location you saw the product.
You can improve the investigation by providing a picture of the item.
A list of where to report price gouging in your state can be found here.
