Sunday, June 13, 2021

Amazon’s pandemic price gouging shows need for new federal law

Amazon is price gouging customers on a wide range of essential goods – jacking up prices on face masks, toilet paper and antibacterial soap by up to 1,000% – as shown in a Public Citizen report released today. The report documents a pattern of outrageous price increases for products listed as “sold by Amazon” as well as those sold by third parties.

“Amazon has fundamentally misled the public, law enforcement and policymakers about price increases during the pandemic,” said Alex Harman, competition policy advocate for Public Citizen and author of the report. “Amazon has publicly blamed third-party sellers for price increases while continuing to raise prices on its own products and allowing those sellers to increase their prices. The facts demonstrate the need for a federal price gouging law and for Amazon to implement major reforms to its pricing and product listing practices.”

This report details 15 essential products that have been sold by Amazon during the COVID-19 pandemic with markups over the recent price on Amazon.com or other national retailers ranging from 76% to more than 1,000%, and 10 additional essential products sold on Amazon by third-party sellers during the same period with markups ranging from 225% to 941%. Here are some of the price increases documented in the report:
• A pack of 50 disposable face masks increased by 1,000%;
• Dial liquid antibacterial hand soap increased by 470%;
• A pack of 100 disposable hand gloves increased by 336%;
• A pack of eight 1000-sheet toilet paper rolls increased by 528%;
• A pack of eight Brawny paper towels increased by 303%;
• A five-pound eight-pack of Pillsbury unbleached flour increased by 425%;
• A one-pound box of Domino powdered sugar increased by 520%; and
• A 6.5-ounce pack of Clabber Girl corn starch increased by 1,010%.

 

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By March 18, every U.S. state and territory had declared an emergency in response to the pandemic, triggering state-level price gouging statutes across the country. Price gouging is illegal in about 35 states, with some states prohibiting price increases of as little as 10%. But the nature of online platforms, which transcend state borders, has made price gouging enforcement increasingly difficult at the state level. And in June, a federal court in Kentucky ruled that state-level price gouging laws are unconstitutional because they attempt to regulate prices outside of the state. A federal price gouging law is urgently needed, Public Citizen insists.

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Amazon supports a federal law but only one that would immunize it from liability for price gouging by third parties that sell on its platform. And instead of policing price gouging on its platform as it promised early in the pandemic, Amazon coordinated a public relations campaign attempting to wash its hands of price gouging, laying the blame entirely on third-party sellers.

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Public Citizen is calling for a federal price gouging law that provides a clear and unambiguous definition of price gouging; includes a very broad list of products, goods and services; establishes significant civil penalties enforceable by the Federal Trade Commission and state attorneys general; applies wherever price gouging occurs in the supply chain; and is applicable during the current COVID-19 pandemic as well as a future disaster or health emergency.

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Public Citizen also is calling on Amazon to implement major reforms to its product listing and pricing, including: publishing a suggested retail price, average price and a link to price history next to every item; capping price increases on all products; ending the creation of new product pages for products previously listed; listing multi-pack items with individual item prices and requiring that multi-packs offer a quantity discount; separating the data on price listings and customer reviews for each item type on listings with multiple varieties; and creating a button that allows customers to report a product listing or pricing problem.

“Amazon is not a victim in the price gouging on its marketplace – it is a perpetrator,” Harman added. “Price gouging is an insidious exploitation of the most vulnerable, especially during a national emergency. There is no excuse for Amazon, one of the largest and most successful corporations in history, to take advantage of vulnerable, scared consumers.”

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