By: Joseph Mallek
Across the country consumers are seeking cleaning and other products to protect themselves due to the COVID-19 outbreak. Supermarkets and online retailers are struggling to keep up with the rise in demand. Businesses and third-party sellers are now increasing their prices due to this rise in demand and decrease in supply. States attorney generals across the country are receiving and responding to complaints from price gouging consumers.[1]This practice is normally lawful but in the current health crisis, states are using price gouging statutes to protect consumers.[2]
Although many states have price gouging statutes, these statutes vary in terminology and penalties. Michigan Gov. Gretchen Whitmer prohibited the resale of a product at a price that is grossly in excess of the purchase price.[3]Price gouging is penalized in Michigan under the Michigan’s Consumer Protection Act.[4]Under the governors executive order, the sale of a product “at a price that is more than 20% higher” than the price charged for that product as of March 9 is prohibited.[5]
In New York, Attorney General Letitia James ordered merchants from price gouging sanitation products and set up a website for consumers to submit price gouging complaints.[6]Under New York law, it is prohibited to sell goods or services at an “unconscionably excessive price” during a declared state of emergency.[7]The New York statute reserves the right to the courts to determine whether a price is unconscionably excessive.[8]Some of the factors the courts consider include the exercise of unfair leverage or unconscionable means and that the “amount of the excess in price is unconscionably extreme.”[9]
In the past few weeks, consumers have reported that the prices on these items have significantly increased.[10]Attorney general’s offices around the country are warning sellers against price gouging necessary products.[11]In addition to consumers reporting abuses, retailers like Amazon must do their part to monitor third-party retailers. As well, it is important for all retailers to keep records and documentation to prove that increases in cost led to the price increase.
[1]Michael Levenson, Price Gouging Complaints Surge Amid Coronavirus Pandemic, The New York Times, https://www.nytimes.com/2020/03/27/us/coronavirus-price-gouging-hand-sanitizer-masks-wipes.html (last visited Mar. 28, 2020).
[2]Price Gouging Laws by State,FindLaw, https://consumer.findlaw.com/consumer-transactions/price-gouging-laws-by-state.html (last visited Mar. 28, 2020).
[3]Ryan Jarvi, AG’s Office Receives New COVID-19 Scam Report, More Than 800 Price-gouging Complaints, Official Website of Michigan.gov (https://www.michigan.gov/coronavirus/0,9753,7-406-98158-522347–,00.html) (last visited Mar. 28, 2020).
[4]Supranote 2.
[5]Supra note 3.
[6]AG James: Price Gouging Will Not Be Tolerated, NYS Attorney General(https://ag.ny.gov/press-release/2020/ag-james-price-gouging-will-not-be-tolerated) (last visited Mar. 28, 2020).
[7]Supranote 2.
[8]General Business Law § 396-r
[9]Id.
[10]Jessica Guynn, Coronavirus price gouging: eBay bans face masks, hand sanitizer and disinfecting wipes, USA Today(https://www.usatoday.com/story/tech/2020/03/06/coronavirus-price-gouging-ebay-bans-face-masks-hand-sanitizer-sales/4976292002/) (last visited Mar. 28, 2020).
[11]Jack Nicas, He Has 17,700 Bottles of Hand Sanitizer and Nowhere to Sell Them, The New York Times(https://www.nytimes.com/2020/03/14/technology/coronavirus-purell-wipes-amazon-sellers.html) (last visited Mar. 28, 2020).