Legal: Crackdown on coronavirus (COVID-19) price gouging
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A $220 bottle of Lysol? Coronavirus leads to price-gouging on Amazon
BY KATE GIBSON
UPDATED ON: MARCH 12, 2020 / 8:06 AM / MONEYWATCH
In the weeks after the World Health Organization declared the coronavirus a global health emergency, fearful consumers looking for hand sanitizer and face masks on Amazon found most of the products cost 50% more than usual, according to a study released Wednesday by U.S. PIRG Education Fund.
The consumer advocacy group said it used price-tracking software to review prices on Amazon for the highest-ranking search results in the weeks following the WHO declaration on January 30, versus the average 90-day cost between December 1 and February 29. Price spikes for masks were especially dramatic, surging 166% on average from the proceeding three-month period.
In one case, U.S. PIRG found a package of 320 Lysol disinfecting wipes that usually cost $13.57 priced at $220. Another listing offered Purell sanitizer that normally sells for $7.99 priced as high as $49.95.
Coronavirus: The Race To Respond ›
The group said such price-gouging was especially rampant among third-party vendors, but that it also took place for Amazon's own products. Nearly one in six masks and hand sanitizers sold by the retailer saw their prices jump at least 50% in February, as Americans became more aware of the virus.
The steep increases caught the attention of California Governor Gavin Newsom, with the Democrat in early March tweeting: "Seriously, @amazon? These prices are absurd," with an image of costly Purell hand sanitizer. Newsome, however, applauded the company's efforts to remove objectionable listings at a news conference the following day.
"There is no place for price gouging on Amazon. We are disappointed that bad actors are attempting to artificially raise prices on basic need products during a global health crisis and, in line with our long-standing policy, have recently blocked or removed hundreds of thousands of offers. We continue to actively monitor our store and remove offers that violate our policies," a spokesperson for the company said in an email. "Price gouging is a clear violation of our policies, unethical, and in some areas, illegal. In addition to terminating these third party accounts, we welcome the opportunity to work directly with states attorneys general to prosecute bad actors."
The findings suggest Amazon needs to act to preemptively stop price-gouging before it happens instead of reacting after the fact, said Adam Garber of U.S. PIRG.
"Our point is, the harm has already been done," he told CBS MoneyWatch. "It's time for Amazon to put in proactive measures before it happens, not weeks after."
While Amazon has scrubbed its site of much of the outlandishly priced masks and sanitizers, examples of price-gouging could still be found this week. On Tuesday, a 50-milliliter bottle of ErYao Hand Sanitizer was being offered for $459 from a shipper in China.
As would be expected, the price-gouging outlined by Garber's group coincided with surging demand. Hand sanitizer sales rose 67% in the four weeks ending February 22 from the year-earlier period, according to market researcher NPD Group. Online sales grew by 170%, NPD said. Hand wipes also saw a rise, with sales up 11% overall and 47% online.
www.cbsnews.com
BY KATE GIBSON
UPDATED ON: MARCH 12, 2020 / 8:06 AM / MONEYWATCH
In the weeks after the World Health Organization declared the coronavirus a global health emergency, fearful consumers looking for hand sanitizer and face masks on Amazon found most of the products cost 50% more than usual, according to a study released Wednesday by U.S. PIRG Education Fund.
The consumer advocacy group said it used price-tracking software to review prices on Amazon for the highest-ranking search results in the weeks following the WHO declaration on January 30, versus the average 90-day cost between December 1 and February 29. Price spikes for masks were especially dramatic, surging 166% on average from the proceeding three-month period.
In one case, U.S. PIRG found a package of 320 Lysol disinfecting wipes that usually cost $13.57 priced at $220. Another listing offered Purell sanitizer that normally sells for $7.99 priced as high as $49.95.
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The group said such price-gouging was especially rampant among third-party vendors, but that it also took place for Amazon's own products. Nearly one in six masks and hand sanitizers sold by the retailer saw their prices jump at least 50% in February, as Americans became more aware of the virus.
The steep increases caught the attention of California Governor Gavin Newsom, with the Democrat in early March tweeting: "Seriously, @amazon? These prices are absurd," with an image of costly Purell hand sanitizer. Newsome, however, applauded the company's efforts to remove objectionable listings at a news conference the following day.
"There is no place for price gouging on Amazon. We are disappointed that bad actors are attempting to artificially raise prices on basic need products during a global health crisis and, in line with our long-standing policy, have recently blocked or removed hundreds of thousands of offers. We continue to actively monitor our store and remove offers that violate our policies," a spokesperson for the company said in an email. "Price gouging is a clear violation of our policies, unethical, and in some areas, illegal. In addition to terminating these third party accounts, we welcome the opportunity to work directly with states attorneys general to prosecute bad actors."
The findings suggest Amazon needs to act to preemptively stop price-gouging before it happens instead of reacting after the fact, said Adam Garber of U.S. PIRG.
"Our point is, the harm has already been done," he told CBS MoneyWatch. "It's time for Amazon to put in proactive measures before it happens, not weeks after."
While Amazon has scrubbed its site of much of the outlandishly priced masks and sanitizers, examples of price-gouging could still be found this week. On Tuesday, a 50-milliliter bottle of ErYao Hand Sanitizer was being offered for $459 from a shipper in China.
As would be expected, the price-gouging outlined by Garber's group coincided with surging demand. Hand sanitizer sales rose 67% in the four weeks ending February 22 from the year-earlier period, according to market researcher NPD Group. Online sales grew by 170%, NPD said. Hand wipes also saw a rise, with sales up 11% overall and 47% online.
A $220 bottle of Lysol? Coronavirus leads to price-gouging on Amazon
The price of surgical masks and hand sanitizer spiked on the retailer's site, consumer group finds.
www.cbsnews.com
Price Gouging
New York State’s Price Gouging Law (General Business Law § 396-r) prohibits merchants from taking unfair advantage of consumers by selling goods or services that are “vital to the health, safety or welfare of consumers” for an "unconscionably excessive price" during an abnormal disruption of the market place or state of emergency. An abnormal disruption in the market place may be triggered by "weather events, power failures, strikes, civil disorder, war, military action, national or local emergency, or other causes.” The price gouging law covers New York State vendors, retailers and suppliers, including but not limited to hotels, supermarkets, pharmacies, gas stations, hardware stores, bodegas, delis, taxi and livery cab drivers, home repair contractors and tree and snow removal services.
New York's price gouging law does not specifically define what constitutes an "unconscionably excessive price." However, the statute provides that a price may be "unconscionably excessive" if: the amount charged represents a “gross disparity” from the price such goods or services were sold or offered for sale immediately prior to the onset of the abnormal disruption of the market. Merchants may provide evidence that justifies their higher prices were justified by increased costs beyond their control.
@tallblacknyc
New York State’s Price Gouging Law (General Business Law § 396-r) prohibits merchants from taking unfair advantage of consumers by selling goods or services that are “vital to the health, safety or welfare of consumers” for an "unconscionably excessive price" during an abnormal disruption of the market place or state of emergency. An abnormal disruption in the market place may be triggered by "weather events, power failures, strikes, civil disorder, war, military action, national or local emergency, or other causes.” The price gouging law covers New York State vendors, retailers and suppliers, including but not limited to hotels, supermarkets, pharmacies, gas stations, hardware stores, bodegas, delis, taxi and livery cab drivers, home repair contractors and tree and snow removal services.
New York's price gouging law does not specifically define what constitutes an "unconscionably excessive price." However, the statute provides that a price may be "unconscionably excessive" if: the amount charged represents a “gross disparity” from the price such goods or services were sold or offered for sale immediately prior to the onset of the abnormal disruption of the market. Merchants may provide evidence that justifies their higher prices were justified by increased costs beyond their control.
@tallblacknyc
Consumer brand group urges Attorney General Barr to fight price gouging due to coronavirus
Coral Murphy
USA TODAY
Consumer Brands Association urged Attorney General William Barr to protect Americans from price gouging of consumer packaged goods as sellers take advantage of the coronavirus outbreak.
In a letter Monday, the lobbying group’s executive vice president of public affairs, Bryan Zumwalt, requests that the Department of Justice collaborate with federal, state and industry partners to prevent price gouging for consumers. As USA TODAY has reported, prices are experiencing hikes on high-demand items, such as hand sanitizers, tissues, face masks and other products.
“Absent federal engagement, Consumer Brands fears that price gouging for consumer products – which has been on the rise in recent weeks – could have the severe adverse impact of preventing consumers from obtaining the preventative consumer products they need to protect themselves from the spread of COVID-19,” the letter reads.
The group, which represents brands such as Coca Cola, Clorox and Colgate-Palmolive, predicts that a continued price hike could discourage Americans to pay excessive prices for these products and lead to a decrease in necessary preventative actions.
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Worried about coronavirus?You can now clean your iPhone with alcohol and Clorox disinfecting wipes
As for states that have already acted against price gouging, Washington State Attorney General Bob Ferguson, for example, whose state has been hit the hardest by the coronavirus outbreak, said his office is investigating and asked for residents to file complaints if they spot gouging.
Companies such as Amazon and eBay have also made efforts to curb third-party sellers who stock the virtual shelves and hike up prices. One listing included a four-pack of 30-ounce bottles of hand sanitizer for $118.
Used car vs. new? These 10 vehicles have obvious answersDear passwords: Forget you. Here's what is going to protect us insteadQuality of life: These 50 cities are among the best places to live in USHow scammers could use coronavirus scare to steal your moneyThe Daily Money: Subscribe to our newsletter
Confirmed cases of COVID-19 in the United States have surpassed 560 across 34 states and the District of Columbia. The U.S. death toll rose to 22, while the worldwide total approached 4,000.
Coral Murphy
USA TODAY
Consumer Brands Association urged Attorney General William Barr to protect Americans from price gouging of consumer packaged goods as sellers take advantage of the coronavirus outbreak.
In a letter Monday, the lobbying group’s executive vice president of public affairs, Bryan Zumwalt, requests that the Department of Justice collaborate with federal, state and industry partners to prevent price gouging for consumers. As USA TODAY has reported, prices are experiencing hikes on high-demand items, such as hand sanitizers, tissues, face masks and other products.
“Absent federal engagement, Consumer Brands fears that price gouging for consumer products – which has been on the rise in recent weeks – could have the severe adverse impact of preventing consumers from obtaining the preventative consumer products they need to protect themselves from the spread of COVID-19,” the letter reads.
The group, which represents brands such as Coca Cola, Clorox and Colgate-Palmolive, predicts that a continued price hike could discourage Americans to pay excessive prices for these products and lead to a decrease in necessary preventative actions.
Stocks and your money:Everything we know
Worried about coronavirus?You can now clean your iPhone with alcohol and Clorox disinfecting wipes
As for states that have already acted against price gouging, Washington State Attorney General Bob Ferguson, for example, whose state has been hit the hardest by the coronavirus outbreak, said his office is investigating and asked for residents to file complaints if they spot gouging.
Companies such as Amazon and eBay have also made efforts to curb third-party sellers who stock the virtual shelves and hike up prices. One listing included a four-pack of 30-ounce bottles of hand sanitizer for $118.
Used car vs. new? These 10 vehicles have obvious answersDear passwords: Forget you. Here's what is going to protect us insteadQuality of life: These 50 cities are among the best places to live in USHow scammers could use coronavirus scare to steal your moneyThe Daily Money: Subscribe to our newsletter
Confirmed cases of COVID-19 in the United States have surpassed 560 across 34 states and the District of Columbia. The U.S. death toll rose to 22, while the worldwide total approached 4,000.
Price Gouging Incidents Follow Coronavirus Outbreak
Heard on Morning Edition
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RACHEL MARTIN, HOST:
Have you been to the supermarket, recently tried to buy hand sanitizer, even toilet paper? Basic supplies are selling out in the wake of the coronavirus. And that creates a problem. In times of demand, price gouging can be a big issue. That is something New York Attorney General Letitia James has noticed. I asked her for the evidence that she's seen.
LETITIA JAMES: We've issued a total of six letters to merchants for price gouging of hand sanitizers and disinfectant sprays. In addition to that, we've sent out three cease-and-desist letters to merchants for selling products they claim to treat or cure coronavirus - individuals who've been engaged in deceptive advertising. They include the televangelist Jim Bakker, who had a person on his show selling a product that claimed to treat coronavirus. And what they are doing is nothing short of taking advantage of the fear that's out there throughout the general public. And what we should be doing is spreading facts and not spreading fear.
MARTIN: So it's one thing to put forth a completely fraudulent cure or something that claims to be a cure for the coronavirus. Price gouging is more complicated, is it not? How do you determine when raising prices crosses a line and becomes illegal price gouging?
JAMES: Well, in one particular instance, an individual - a store in Midtown Manhattan - was selling a hand sanitizer for $79. And so there's no definitive answer to that question, but you know it when you see it. And so I don't know of any hand sanitizer that costs almost $80. And so you know it when you see it - when individuals are taking advantage of the market, particularly when a neighboring store is selling the same product for considerably less.
MARTIN: The Justice Department created an agency called the National Center for Disaster Fraud after Hurricane Katrina. Do you think the federal government is doing enough to protect people from getting taken advantage of financially.
JAMES: Clearly, the federal government can do more. I'm not in a position right now to criticize the federal government. It will not inure to the benefit of anybody, and it will not result in addressing the issue of this virus. And what we really should be doing is working together. The federal government should be working with municipal governments, as well as state governments, and providing us assistance and testing and providing all municipalities and private companies testing kits so that we can test the general public.
MARTIN: And lastly, what can consumers do if they encounter what they believe to be price gouging in their state?
JAMES: So let me just say that the office of attorney general - we have - one, urging individuals caution with respect to making charitable donations. If individuals want to report retailers that appear to be taking unfair advantage of consumers, they can report these incidents to the office of attorney general. You can report suspicious charitable solicitations and scams to the office of attorney general - our charities bureau. And if individuals are contacting the general public with respect to investment scams, they can also contact our office, as well as the United States Securities and Exchange Commission.
MARTIN: New York Attorney General Letitia James, thank you so much.
JAMES: Thank you so much.
Senator slams Amazon over coronavirus price gouging on hand sanitizer and face masks
24
Senator Ed Markey wants Amazon to open up about its price gouging response
By Nick Statt@nickstatt Mar 4, 2020, 5:21pm EST
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US Senator Ed Markey (D-MA) is harshly criticizing what he sees as Amazon’s inconsistent response to ongoing coronavirus-related price gouging on the e-commerce company’s third-party Marketplace platform. While Markey is acknowledging that Amazon is indeed removing an ever-increasing number of listings, he said Wednesday in a new letter to CEO Jeff Bezos that Amazon’s response needs to improve. He’s chiefly concerned about the lack of transparency around how it determines a product is having its prices unfairly raised and the process Amazon undergoes to detect that and then take action.
“Last week, Amazon took appropriate first steps in response to this price gouging when it announced it had removed ‘tens of thousands’ of listings and reiterated that sellers on its platform must comply with its Fair Price Policy,” Markey writes. “But continued reports of price gouging and a lack of transparency have left customers exposed to unfair trade practices.” He cites a Wired report that quoted a seller admitting the enforcement can be “haphazard.”
Amazon did not immediately respond to a request for comment on Markey’s letter.
The price gouging activity was first picked up on last month as COVID-19, the respiratory illness caused by the novel coronavirus, began spreading worldwide. It’s hitting popular health and safety products like 3M-produced face masks and sanitization items like Purell hand sanitizer. Neither of those companies are the ones raising the prices. Instead, it’s third-party resellers who are doing so, and it’s against Amazon’s Fair Pricing Policy that specifically warns against price gouging.
AMAZON HAS TAKEN DOWN MORE THAN 1 MILLION LISTINGS, BUT PRICE GOUGING KEEPS HAPPENING
As Wired reported, some items were having their prices increased by three to four times the standard level. Since then, the gouging has become noticeably worse, with 24-packs of 2-ounce hand sanitizer bottles seeing jumps from $10 per box to more than $400. Shipping costs are also being raised to exorbitant levels.
There are numerous state laws against price gouging during times of emergency on essential items like bottled water. And Amazon’s own policy dictates that you may not drastically increase the price of items well above a recent average or charge excessive shipping fees regardless of what the product is. Yet the company relies on user reports and its own internal detection systems for sussing out the bad actors, and quite often, offending listings slip through the cracks. That’s proving especially true during a health crisis like the coronavirus.
Markey is calling on Amazon, which he says has a “particular responsibility to guard against price gouging in current circumstances,” to answer certain questions. Those include how it determines price gouging is occurring, at what level an item is considered unfairly priced, how many warnings and removals or suspensions it’s given out so far, and what resources it’s devoting to combating the ongoing price gouging problem.
In a statement given to ABC News earlier this week, Amazon acknowledged the issue as a growing concern both for the integrity of its platform and for customers who may be running low on options to secure supplies during a time of increased public health concern.
“There is no place for price gouging on Amazon,” a company spokesperson told the news organization. “We are disappointed that bad actors are attempting to artificially raise prices on basic-need products during a global health crisis, and, in line with our longstanding policy, have recently blocked or removed tens of thousands of offers.” Amazon said this week it’s also removed more than 1 million listings over price gouging.
24
Senator Ed Markey wants Amazon to open up about its price gouging response
By Nick Statt@nickstatt Mar 4, 2020, 5:21pm EST
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US Senator Ed Markey (D-MA) is harshly criticizing what he sees as Amazon’s inconsistent response to ongoing coronavirus-related price gouging on the e-commerce company’s third-party Marketplace platform. While Markey is acknowledging that Amazon is indeed removing an ever-increasing number of listings, he said Wednesday in a new letter to CEO Jeff Bezos that Amazon’s response needs to improve. He’s chiefly concerned about the lack of transparency around how it determines a product is having its prices unfairly raised and the process Amazon undergoes to detect that and then take action.
“Last week, Amazon took appropriate first steps in response to this price gouging when it announced it had removed ‘tens of thousands’ of listings and reiterated that sellers on its platform must comply with its Fair Price Policy,” Markey writes. “But continued reports of price gouging and a lack of transparency have left customers exposed to unfair trade practices.” He cites a Wired report that quoted a seller admitting the enforcement can be “haphazard.”
Amazon did not immediately respond to a request for comment on Markey’s letter.
The price gouging activity was first picked up on last month as COVID-19, the respiratory illness caused by the novel coronavirus, began spreading worldwide. It’s hitting popular health and safety products like 3M-produced face masks and sanitization items like Purell hand sanitizer. Neither of those companies are the ones raising the prices. Instead, it’s third-party resellers who are doing so, and it’s against Amazon’s Fair Pricing Policy that specifically warns against price gouging.
AMAZON HAS TAKEN DOWN MORE THAN 1 MILLION LISTINGS, BUT PRICE GOUGING KEEPS HAPPENING
As Wired reported, some items were having their prices increased by three to four times the standard level. Since then, the gouging has become noticeably worse, with 24-packs of 2-ounce hand sanitizer bottles seeing jumps from $10 per box to more than $400. Shipping costs are also being raised to exorbitant levels.
There are numerous state laws against price gouging during times of emergency on essential items like bottled water. And Amazon’s own policy dictates that you may not drastically increase the price of items well above a recent average or charge excessive shipping fees regardless of what the product is. Yet the company relies on user reports and its own internal detection systems for sussing out the bad actors, and quite often, offending listings slip through the cracks. That’s proving especially true during a health crisis like the coronavirus.
Markey is calling on Amazon, which he says has a “particular responsibility to guard against price gouging in current circumstances,” to answer certain questions. Those include how it determines price gouging is occurring, at what level an item is considered unfairly priced, how many warnings and removals or suspensions it’s given out so far, and what resources it’s devoting to combating the ongoing price gouging problem.
In a statement given to ABC News earlier this week, Amazon acknowledged the issue as a growing concern both for the integrity of its platform and for customers who may be running low on options to secure supplies during a time of increased public health concern.
“There is no place for price gouging on Amazon,” a company spokesperson told the news organization. “We are disappointed that bad actors are attempting to artificially raise prices on basic-need products during a global health crisis, and, in line with our longstanding policy, have recently blocked or removed tens of thousands of offers.” Amazon said this week it’s also removed more than 1 million listings over price gouging.
Amid The Coronavirus Outbreak, Retailers Try To Combat Price-Gouging Online
Joan VerdonSenior Contributor
Retail
Fear of the coronavirus is causing shortages of hand sanitizer, resulting in price-gouging of Purell ... [+]
CQ-ROLL CALL, INC VIA GETTY IMAGES
Shortages of hand sanitizer and face masks mean state laws designed to protect consumers in the aftermath of hurricanes and other natural disasters may be used to fight a new threat: Purell price-gouging.
More than two-thirds of the states have laws preventing price-gouging of necessities such as gasoline or bottled water during a state of emergency. Now, lawmakers are looking at whether those regulations can be applied to products in short supply due to coronavirus fears.
While there have been reports of brick-and-mortar stores hiking prices, such as the Michigan retailer reportedly selling individual face masks in Ziploc bags for $10 apiece, the bigger problem is online, where in some cases algorithms automatically boost prices as demand surges.
Today In: Retail
Amazon and other online marketplaces that use third-party sellers are being criticized for examples of extreme price-gouging on their sites, such as $100 bottles of hand sanitizer or face masks marked up 500%.
While third-party sellers are independent merchants on the Amazon site, consumers are asking on social media whether Amazon is benefiting from the price-gouging because it gets a commission on the third-party sales.
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For Amazon, and any other retailers accused of price-gouging, their biggest risk could be in the court of public opinion.
Amazon has 5 million sellers on its site, and 50% of its sales are by third party sellers.
Amazon has acted quickly to remove examples of price-gouging, and also has shut down sellers promising fraudulent COVID-19 cures. It released a statement that shows it understands how screenshots of overpriced Purell could create a backlash against Amazon, not the individual third-party seller.
“There is no place for price gouging on Amazon,” a company spokesperson said in a statement to Forbes.com. “We are disappointed that bad actors are attempting to artificially raise prices on basic need products during a global health crisis.” The company said it has blocked or removed “tens of thousands of offers” and that it will actively monitor the site and remove any new offenders.
E-commerce, where prices can rise and fall automatically based on what the competition is doing and market demand, has taken price-gouging to a new level.
“Retailers who practice dynamic pricing need to monitor algorithms to ensure that prices don’t skyrocket,” said Kelly Lynch, retail solutions manager at ActiveViam, which provides pricing technology to retail and financial brands.
While a crisis such as the COVID-19 outbreak presents an opportunity for retailers in terms of increased demand, “ultimately retailers should understand that in the long run this will hurt goodwill and relationships with the customer,” if they use the increased demand to take advantage of customers, said Lynch.
Hand sanitizer is sold out at an Office Depot in northeast Minneapolis. on Monday, March 2, 2020. ... [+]
STAR TRIBUNE VIA GETTY IMAGES
States in the past have acted aggressively to crack down on retail price-gouging, but the prosecutions typically involved brick-and-mortar stores, gasoline stations or hotels.
After Hurricane Sandy hit New Jersey in 2012, that state accused four hotels, three gas stations and a hardware store of price-gouging. The businesses settled with the state and paid $282,844 in fines.
Florida prosecuted price-gougers after Hurricane Irma and Texas did so after Hurricane Harvey.
Most of the state laws prohibit price-gouging during a declared state of emergency. Typically retailers are allowed to raise prices by no more than 10% during the emergency.
The Michigan Attorney General Dana Nessel warned Tuesday that she will “bring the hammer down on any person or business that uses this public health threat to feed their own greed.”
“Whether you run a national chain, a local store or are just looking for ways to get rich on eBay, the expectations are the same: follow the law,” Nessel said in a statement reported by Michigan news site MLive.com.
A New York state senator said Tuesday he will introduce legislation to expand New York’s price-gouging law to cover public health emergencies and prohibit excessive markups on medical supplies.
Amazon third-party sellers have been debating the price-gouging accusations on the Amazon sellers forum pages, with a number arguing that the price hikes simply reflect the laws of supply and demand.
But as Dana Radcliffe, senior lecturer of business ethics at Cornell’s SC Johnson College of Business, points out, the problem with that argument is “in emergencies where critical supplies are scarce, the conditions of a ‘free and fair market’ don’t exist—since the buyers don’t have options.”
“They cannot simply buy at lower prices from competing suppliers,” he said. “Rather the sellers are in the position of monopolists who can demand whatever price they want because their customers have no alternatives. It’s such exploitation of fellow citizens’ vulnerability that makes price-gouging unfair—and frankly unpatriotic.”
It’s also bad for business, because consumers remember, after the crisis has passed, which gas station, or supermarket, or e-commerce retailer, doubled or tripled prices on essential items.
Joan VerdonSenior Contributor
Retail
Fear of the coronavirus is causing shortages of hand sanitizer, resulting in price-gouging of Purell ... [+]
CQ-ROLL CALL, INC VIA GETTY IMAGES
Shortages of hand sanitizer and face masks mean state laws designed to protect consumers in the aftermath of hurricanes and other natural disasters may be used to fight a new threat: Purell price-gouging.
More than two-thirds of the states have laws preventing price-gouging of necessities such as gasoline or bottled water during a state of emergency. Now, lawmakers are looking at whether those regulations can be applied to products in short supply due to coronavirus fears.
While there have been reports of brick-and-mortar stores hiking prices, such as the Michigan retailer reportedly selling individual face masks in Ziploc bags for $10 apiece, the bigger problem is online, where in some cases algorithms automatically boost prices as demand surges.
Today In: Retail
Amazon and other online marketplaces that use third-party sellers are being criticized for examples of extreme price-gouging on their sites, such as $100 bottles of hand sanitizer or face masks marked up 500%.
While third-party sellers are independent merchants on the Amazon site, consumers are asking on social media whether Amazon is benefiting from the price-gouging because it gets a commission on the third-party sales.
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For Amazon, and any other retailers accused of price-gouging, their biggest risk could be in the court of public opinion.
Amazon has 5 million sellers on its site, and 50% of its sales are by third party sellers.
Amazon has acted quickly to remove examples of price-gouging, and also has shut down sellers promising fraudulent COVID-19 cures. It released a statement that shows it understands how screenshots of overpriced Purell could create a backlash against Amazon, not the individual third-party seller.
“There is no place for price gouging on Amazon,” a company spokesperson said in a statement to Forbes.com. “We are disappointed that bad actors are attempting to artificially raise prices on basic need products during a global health crisis.” The company said it has blocked or removed “tens of thousands of offers” and that it will actively monitor the site and remove any new offenders.
E-commerce, where prices can rise and fall automatically based on what the competition is doing and market demand, has taken price-gouging to a new level.
“Retailers who practice dynamic pricing need to monitor algorithms to ensure that prices don’t skyrocket,” said Kelly Lynch, retail solutions manager at ActiveViam, which provides pricing technology to retail and financial brands.
While a crisis such as the COVID-19 outbreak presents an opportunity for retailers in terms of increased demand, “ultimately retailers should understand that in the long run this will hurt goodwill and relationships with the customer,” if they use the increased demand to take advantage of customers, said Lynch.
Hand sanitizer is sold out at an Office Depot in northeast Minneapolis. on Monday, March 2, 2020. ... [+]
STAR TRIBUNE VIA GETTY IMAGES
States in the past have acted aggressively to crack down on retail price-gouging, but the prosecutions typically involved brick-and-mortar stores, gasoline stations or hotels.
After Hurricane Sandy hit New Jersey in 2012, that state accused four hotels, three gas stations and a hardware store of price-gouging. The businesses settled with the state and paid $282,844 in fines.
Florida prosecuted price-gougers after Hurricane Irma and Texas did so after Hurricane Harvey.
Most of the state laws prohibit price-gouging during a declared state of emergency. Typically retailers are allowed to raise prices by no more than 10% during the emergency.
The Michigan Attorney General Dana Nessel warned Tuesday that she will “bring the hammer down on any person or business that uses this public health threat to feed their own greed.”
“Whether you run a national chain, a local store or are just looking for ways to get rich on eBay, the expectations are the same: follow the law,” Nessel said in a statement reported by Michigan news site MLive.com.
A New York state senator said Tuesday he will introduce legislation to expand New York’s price-gouging law to cover public health emergencies and prohibit excessive markups on medical supplies.
Amazon third-party sellers have been debating the price-gouging accusations on the Amazon sellers forum pages, with a number arguing that the price hikes simply reflect the laws of supply and demand.
But as Dana Radcliffe, senior lecturer of business ethics at Cornell’s SC Johnson College of Business, points out, the problem with that argument is “in emergencies where critical supplies are scarce, the conditions of a ‘free and fair market’ don’t exist—since the buyers don’t have options.”
“They cannot simply buy at lower prices from competing suppliers,” he said. “Rather the sellers are in the position of monopolists who can demand whatever price they want because their customers have no alternatives. It’s such exploitation of fellow citizens’ vulnerability that makes price-gouging unfair—and frankly unpatriotic.”
It’s also bad for business, because consumers remember, after the crisis has passed, which gas station, or supermarket, or e-commerce retailer, doubled or tripled prices on essential items.
NY Lawmakers Push New Bill To Combat Price Gouging As COVID-19 Spreads
BY SYDNEY PEREIRA
MARCH 13, 2020 3:32 P.M.
• 1 COMMENT
SHUTTERSTOCK
State lawmakers want to crack down on price gouging of hand sanitizer and other consumer medical products during the escalating COVID-19 pandemic with new legislation introduced this month, after various stores have been spotted price gouging products like Purell hand sanitizer and Lysol disinfectant spray.
Price gouging is technically barred by law already, particularly during a state of emergency (which Governor Andrew Cuomo declared Saturday and Mayor Bill de Blasio declared in NYC on Thursday). Goods vital for the health and safety of consumers sold at an "unconscionably excessive price" can lead to penalties against retailers. But the process ultimately requires courts to determine when a price increase is excessive.
The new legislation aims to set a more clear guideline for what exactly excessive price hikes mean.
"We're trying to cut through the clutter and set a presumptive price level of 10 percent or greater in a public health emergency that would deem it to be price gouging," State Senator Brad Hoylman, a sponsor of the bill, told Gothamist. The bill would create a presumption that price hikes greater than 10 percent would be considered illicit gouging, unless retailers can show such increases are related to supply costs.
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"It's a standard that has been used across the country in states like California, New Jersey, and the District of Columbia," he said. "The 10 percent is an identifiable cap that would both send a message and add clarity to the existing price gouging."
State Assemblymember Nily Rozic, the Assembly sponsor, said in a statement that the legislation "would ensure that no one can prey on consumers' fears and cause widespread panic."
Hoylman added communities susceptible to coronavirus overlap with those vulnerable to price gougers—like seniors on fixed-incomes.
AARP's New York State Legislative representative Bill Ferris said in a statement in support of the bill that it could "help bring an end to this terrible practice," echoing Hoylman that older New Yorkers are "at particular risk."
"Not only is it wrong, but it is dangerous," Ferris said during an Albany press conference.
The legislation gives the New York Attorney General the power to enforce a civil fine up to $25,000 onto manufacturers, retailers, and distributors. The state Department of Health would be able to add items to the list of included products, which includes consumer medical products like sanitizer, wipes, and over the counter drugs, according to the bill.
Governor Andrew Cuomo has attempted to curtail lack of hand sanitizer access by launching state-made sanitizer, made with the labor of underpaid prisoners making an average of 65 cents per hour. It remains unclear how most consumers can get the state's sanitizer though, since it is currently being distributed to high-risk areas.
Cuomo's office did not respond to requests for comment on the bill, but Hoylman feels confident it could be passed swiftly since it already has 12 co-sponsors in the Senate.
"We think this will add another tool to governments' kit to ensure that vulnerable communities don't get doubly hit hard by the coronavirus outbreak," Hoylman said
gothamist.com
BY SYDNEY PEREIRA
MARCH 13, 2020 3:32 P.M.
• 1 COMMENT
SHUTTERSTOCK
State lawmakers want to crack down on price gouging of hand sanitizer and other consumer medical products during the escalating COVID-19 pandemic with new legislation introduced this month, after various stores have been spotted price gouging products like Purell hand sanitizer and Lysol disinfectant spray.
Price gouging is technically barred by law already, particularly during a state of emergency (which Governor Andrew Cuomo declared Saturday and Mayor Bill de Blasio declared in NYC on Thursday). Goods vital for the health and safety of consumers sold at an "unconscionably excessive price" can lead to penalties against retailers. But the process ultimately requires courts to determine when a price increase is excessive.
The new legislation aims to set a more clear guideline for what exactly excessive price hikes mean.
"We're trying to cut through the clutter and set a presumptive price level of 10 percent or greater in a public health emergency that would deem it to be price gouging," State Senator Brad Hoylman, a sponsor of the bill, told Gothamist. The bill would create a presumption that price hikes greater than 10 percent would be considered illicit gouging, unless retailers can show such increases are related to supply costs.
ADVERTISEMENT
"It's a standard that has been used across the country in states like California, New Jersey, and the District of Columbia," he said. "The 10 percent is an identifiable cap that would both send a message and add clarity to the existing price gouging."
State Assemblymember Nily Rozic, the Assembly sponsor, said in a statement that the legislation "would ensure that no one can prey on consumers' fears and cause widespread panic."
Hoylman added communities susceptible to coronavirus overlap with those vulnerable to price gougers—like seniors on fixed-incomes.
AARP's New York State Legislative representative Bill Ferris said in a statement in support of the bill that it could "help bring an end to this terrible practice," echoing Hoylman that older New Yorkers are "at particular risk."
"Not only is it wrong, but it is dangerous," Ferris said during an Albany press conference.
The legislation gives the New York Attorney General the power to enforce a civil fine up to $25,000 onto manufacturers, retailers, and distributors. The state Department of Health would be able to add items to the list of included products, which includes consumer medical products like sanitizer, wipes, and over the counter drugs, according to the bill.
Governor Andrew Cuomo has attempted to curtail lack of hand sanitizer access by launching state-made sanitizer, made with the labor of underpaid prisoners making an average of 65 cents per hour. It remains unclear how most consumers can get the state's sanitizer though, since it is currently being distributed to high-risk areas.
Cuomo's office did not respond to requests for comment on the bill, but Hoylman feels confident it could be passed swiftly since it already has 12 co-sponsors in the Senate.
"We think this will add another tool to governments' kit to ensure that vulnerable communities don't get doubly hit hard by the coronavirus outbreak," Hoylman said
NY Lawmakers Push New Bill To Combat Price Gouging As COVID-19 Spreads
A new state bill would determine what price hikes would be deemed excessive price gouging during public health emergencies, like the COVID-19 outbreak.
gothamist.com
Reporting Price Gouging
Any New Yorker who sees excessively priced consumer goods and services that are used primarily for personal, family or household purposes to prevent or respond to the Covid-19 virus should file a complaint with the New York State Division of Consumer Protection.
New Yorkers can now report sudden and unexpected increases in consumer goods such as hand sanitizer, cleaning supplies, or other health and sanitation related products by calling the consumer hotline toll free at 800-697-1220. This line is available seven days a week from 8:30 am to 8:30 pm for consumers.
Consumers can also visit the DCP website at www.dos.ny.gov/consumerprotection. Complaints can be filed against vendors, retailers and suppliers doing business in New York State.
Consumer Complaint forms are available for filing 24/7 at: CONSUMER COMPLAINT FORM
When reporting, be prepared to provide details of the alleged price gouging to include the location of the merchant and any available proof of the excessive price(s), such as receipts or pictures.
The Division’s Consumer Assistance Unit will review the complaint and, if appropriate, engage in voluntary mediation on behalf of the consumer or refer the complaint to the Office of the Attorney General to initiate an enforcement action. In either instance, the Division will keep the consumer informed of all actions taken on their behalf.
www.governor.ny.gov
Any New Yorker who sees excessively priced consumer goods and services that are used primarily for personal, family or household purposes to prevent or respond to the Covid-19 virus should file a complaint with the New York State Division of Consumer Protection.
New Yorkers can now report sudden and unexpected increases in consumer goods such as hand sanitizer, cleaning supplies, or other health and sanitation related products by calling the consumer hotline toll free at 800-697-1220. This line is available seven days a week from 8:30 am to 8:30 pm for consumers.
Consumers can also visit the DCP website at www.dos.ny.gov/consumerprotection. Complaints can be filed against vendors, retailers and suppliers doing business in New York State.
Consumer Complaint forms are available for filing 24/7 at: CONSUMER COMPLAINT FORM
When reporting, be prepared to provide details of the alleged price gouging to include the location of the merchant and any available proof of the excessive price(s), such as receipts or pictures.
The Division’s Consumer Assistance Unit will review the complaint and, if appropriate, engage in voluntary mediation on behalf of the consumer or refer the complaint to the Office of the Attorney General to initiate an enforcement action. In either instance, the Division will keep the consumer informed of all actions taken on their behalf.
Combat Price Gouging on Products that Protect People from Coronavirus (COVID-19)
Manhattan Hardware Store Hit With Fine for Coronavirus Price Gouging
Officials over the weekend put businesses on notice, warning that price gouging on cleaning and sanitizing products would not be tolerated
Published March 8, 2020 • Updated on March 9, 2020 at 3:59 am
Ad: 0:06
ShareExpand
NBCUniversal, Inc.
A hardware store in Manhattan was fined for hiking prices on products like hand sanitizer and antibacterial wipes, cleaning products popular in recent weeks to prevent or ward off the spread COVID-19.
A hardware store in Manhattan was fined for hiking prices on products like hand sanitizer and antibacterial wipes, cleaning products popular in recent weeks to prevent or ward off the spread COVID-19.
New York City Mayor Bill de Blasio and New York Governor Andrew Cuomo have both issued warnings to businesses in recent days that price gouging would be severely fined. According to de Blasio's office, stores found to be overcharging consumers will be issued a violation with a fine up to $500.
Scheman and Grant Hardware on W 38th Street in Manhattan was accused of hiking up the prices of disinfecting sprays, wipes and hand sanitizer.
"They have been fined. This is unacceptable," de Blasio said at a press conference Sunday. "Price gouging will be acted upon. This is a crisis, not a time to profit."
COVID-19
MAR 9
How Many in Tri-State Tested Positive for Coronavirus? See Latest Cases by the Numbers
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MAR 6
No Concerts? No Crowds? How Tri-State COVID-19 Action Affects Daily Life
Scheman and Grant was closed Sunday, but a list of prices was posted on the store's door. Clorox and Lysol sprays were being sold for $20, while a three-pack of wipes posted at nearly $40.
Along with the high prices, the store had a notice posted telling customers to check the prices before buying the products because the hardware store would not be accepting returns.
Cuomo also spoke to the price gouging and the business's efforts, suggesting on Saturday that the retailer tried to charge $80 for a bottle of hand sanitizer.
“I want businesses to be aware that you can lose your license because of price gouging,” the governor said. “Not only is it disrespectful, it’s also illegal. And you will be caught.”
Timeline: Tracking the Spread of COVID-19 in Tri-State
On Friday, Cuomo said he would direct AG Letitia James to investigate instances of price gouging of surgical masks and other materials. And on Saturday, Cuomo made an emergency disaster declaration which, among other things, allows the state to investigate and penalize those price gouging medical and sanitary supplies.
Out on Long Island, government officials condemned reports of widespread price gouging.
"We’ve seen this before with Sandy. Prices were raised astronomically and unfairly. Now we’re seeing this with the resources made to keep people safe from the coronavirus," said Nassau County Executive Laura Curran.
To report incidents of price gouging to the New York State Attorney General’s office please call 1-800-697-1220.
Officials over the weekend put businesses on notice, warning that price gouging on cleaning and sanitizing products would not be tolerated
Published March 8, 2020 • Updated on March 9, 2020 at 3:59 am
Ad: 0:06
ShareExpand
NBCUniversal, Inc.
A hardware store in Manhattan was fined for hiking prices on products like hand sanitizer and antibacterial wipes, cleaning products popular in recent weeks to prevent or ward off the spread COVID-19.
A hardware store in Manhattan was fined for hiking prices on products like hand sanitizer and antibacterial wipes, cleaning products popular in recent weeks to prevent or ward off the spread COVID-19.
New York City Mayor Bill de Blasio and New York Governor Andrew Cuomo have both issued warnings to businesses in recent days that price gouging would be severely fined. According to de Blasio's office, stores found to be overcharging consumers will be issued a violation with a fine up to $500.
Scheman and Grant Hardware on W 38th Street in Manhattan was accused of hiking up the prices of disinfecting sprays, wipes and hand sanitizer.
"They have been fined. This is unacceptable," de Blasio said at a press conference Sunday. "Price gouging will be acted upon. This is a crisis, not a time to profit."
COVID-19
MAR 9
How Many in Tri-State Tested Positive for Coronavirus? See Latest Cases by the Numbers
CORONAVIRUS
MAR 6
No Concerts? No Crowds? How Tri-State COVID-19 Action Affects Daily Life
Scheman and Grant was closed Sunday, but a list of prices was posted on the store's door. Clorox and Lysol sprays were being sold for $20, while a three-pack of wipes posted at nearly $40.
Along with the high prices, the store had a notice posted telling customers to check the prices before buying the products because the hardware store would not be accepting returns.
Cuomo also spoke to the price gouging and the business's efforts, suggesting on Saturday that the retailer tried to charge $80 for a bottle of hand sanitizer.
“I want businesses to be aware that you can lose your license because of price gouging,” the governor said. “Not only is it disrespectful, it’s also illegal. And you will be caught.”
Timeline: Tracking the Spread of COVID-19 in Tri-State
On Friday, Cuomo said he would direct AG Letitia James to investigate instances of price gouging of surgical masks and other materials. And on Saturday, Cuomo made an emergency disaster declaration which, among other things, allows the state to investigate and penalize those price gouging medical and sanitary supplies.
Out on Long Island, government officials condemned reports of widespread price gouging.
"We’ve seen this before with Sandy. Prices were raised astronomically and unfairly. Now we’re seeing this with the resources made to keep people safe from the coronavirus," said Nassau County Executive Laura Curran.
To report incidents of price gouging to the New York State Attorney General’s office please call 1-800-697-1220.
Price-Gouging Amid COVID-19 Fears Should Be Made Illegal: NYC Pol
Face masks have been reported to be selling in NYC for $75.
By Anna Quinn, Patch Staff
Mar 3, 2020 10:45 am ET | Updated Mar 3, 2020 3:52 pm ET
Reply (2)
2
A Manhattan lawmaker's bill would stop price-gouging of masks, hand sanitizer and other products during the coronavirus outbreak. (Deb Belt/Patch.)
WEST VILLAGE, MANHATTAN — A Manhattan lawmaker wants to make it illegal for businesses to double or triple the prices for hand sanitizer, face masks and other medical products as New Yorkers hoard supplies during the coronavirus outbreak.
State Sen. Brad Hoylman, whose district stretches from the Village to the Upper West Side, introduced a bill Tuesday that would crackdown on retailers that price-gouge medical supplies during a public health emergency.
The law, which Hoylman said exists in 34 other states, would help stop already-skyrocketing prices on the medical products in Manhattan.
Price-gouging has become a problem both in New York and parts of the world where the coronavirus has become the most prevalent, he said.
"It's said that after the storm come the vultures – and that's exactly what could happen here if we don't act now to stop price gouging in anticipation of the coronavirus outbreak here in New York," Hoylman said.
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"Profiting off fear of disease is unconscionable," he continued. "We can't allow shady businesses to hike prices on the supplies New Yorkers need to stay safe and healthy, like hand sanitizer and face masks."
(Keep up with NYC events and news by subscribing to West Village Patch to receive daily newsletters and breaking news alerts.)
Hoylman pointed to reports that surgical masks in Chinatown that once sold for $20 were now going for $75 and news that Upper West Side retailers were struggling to stock up on more Purrell, masks and wipes since distributors were jacking up prices.
His bill would amend New York's existing price-gouging statute to prohibit selling consumer medical supplies at an "unconscionable excessive price," or a price 10 percent higher than before a public emergency began, during an outbreak.
The New York Attorney General could fine businesses that jack up prices up to $25,000 under the law.
The bill comes as New Yorkers are buying up hand sanitizer, face masks and other products from stores in an effort to stay healthy during the outbreak, despite advice from the U.S. Surgeon General that face masks won't help healthy people avoid the COVID-19 coronavirus.
So far, two people in New York City have been diagnosed with the virus and six U.S. residents have died and seven have recovered COVID-19, data show.
As of Tuesday, there are 92,196 confirmed COVID-19 cases worldwide and 105 in the U.S., according to Johns Hopkins University data.
New York City Transit has launched a massive scrub-down system in subways, buses and trains and New York City has reserved 1,200 hospital beds dedicated to treating novel coronavirus, officials said.
Face masks have been reported to be selling in NYC for $75.
By Anna Quinn, Patch Staff
Mar 3, 2020 10:45 am ET | Updated Mar 3, 2020 3:52 pm ET
Reply (2)
2
A Manhattan lawmaker's bill would stop price-gouging of masks, hand sanitizer and other products during the coronavirus outbreak. (Deb Belt/Patch.)
WEST VILLAGE, MANHATTAN — A Manhattan lawmaker wants to make it illegal for businesses to double or triple the prices for hand sanitizer, face masks and other medical products as New Yorkers hoard supplies during the coronavirus outbreak.
State Sen. Brad Hoylman, whose district stretches from the Village to the Upper West Side, introduced a bill Tuesday that would crackdown on retailers that price-gouge medical supplies during a public health emergency.
The law, which Hoylman said exists in 34 other states, would help stop already-skyrocketing prices on the medical products in Manhattan.
Price-gouging has become a problem both in New York and parts of the world where the coronavirus has become the most prevalent, he said.
"It's said that after the storm come the vultures – and that's exactly what could happen here if we don't act now to stop price gouging in anticipation of the coronavirus outbreak here in New York," Hoylman said.
Subscribe
"Profiting off fear of disease is unconscionable," he continued. "We can't allow shady businesses to hike prices on the supplies New Yorkers need to stay safe and healthy, like hand sanitizer and face masks."
(Keep up with NYC events and news by subscribing to West Village Patch to receive daily newsletters and breaking news alerts.)
Hoylman pointed to reports that surgical masks in Chinatown that once sold for $20 were now going for $75 and news that Upper West Side retailers were struggling to stock up on more Purrell, masks and wipes since distributors were jacking up prices.
His bill would amend New York's existing price-gouging statute to prohibit selling consumer medical supplies at an "unconscionable excessive price," or a price 10 percent higher than before a public emergency began, during an outbreak.
The New York Attorney General could fine businesses that jack up prices up to $25,000 under the law.
The bill comes as New Yorkers are buying up hand sanitizer, face masks and other products from stores in an effort to stay healthy during the outbreak, despite advice from the U.S. Surgeon General that face masks won't help healthy people avoid the COVID-19 coronavirus.
So far, two people in New York City have been diagnosed with the virus and six U.S. residents have died and seven have recovered COVID-19, data show.
As of Tuesday, there are 92,196 confirmed COVID-19 cases worldwide and 105 in the U.S., according to Johns Hopkins University data.
New York City Transit has launched a massive scrub-down system in subways, buses and trains and New York City has reserved 1,200 hospital beds dedicated to treating novel coronavirus, officials said.
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