Price Gouging Crackdown: State AGs Give Notice to Online Retailers

Online prices on some scarce products are still much higher than usual. Now a coalition of state attorneys general is pushing for tougher standards to stop profiteers.

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As complaints continue to climb -- along with prices for important household and sanitary goods -- more than half the nation's attorneys general have announced a joint effort to stop coronavirus price gouging.

The group of top prosecutors from 32 states, along with the District of Columbia and Puerto Rico, jointly issued letters to the nation's top online retailers and marketplaces, urging tougher standards to identify and stop would-be profiteers.

California Attorney General Xavier Becerra was first to send the notices, on March 20. He added his office to the national effort Wednesday.

“Price gouging during a time of national emergency is not only disgraceful, it is illegal,” Becerra said. “Large online marketplaces have a responsibility to the public to take immediate and vigorous steps to eliminate predatory behavior, which they know is illegal, from their platforms."

Consumer watchdog U.S. Public Interest Research Group, or PIRG, said it is coordinating with prosecutors to track down possible price gouging. Emily Rusch, education fund director with PIRG's California chapter CALPIRG, said authorities should act urgently.

“Americans are already worried about their health and the health of their loved ones during this pandemic," Rusch said in a news release. "They shouldn’t also have to worry about being ripped off on the critical supplies they need to get through it.”

Possible Price Gouging Abounds

NBC Bay Area found several examples of unusually high prices on hard-to-find consumer items, in online searches on Wednesday. For example, we came across eBay listings for single packs of toilet paper, ranging from $34 to $49.

This screen grab taken from eBay on Wednesday, March 25, shows listings for single packages of toilet paper, ranging from $34 to $49. (Credit: NBC Bay Area; eBay)

On Amazon, we found a box of 100 disposable gloves listed for more than $200, with another $50 for shipping. A similar product was listed for less than $25, shipping included:

Above: This screen grab taken from Amazon on Wednesday, March 25, shows a listing for a box of 100 disposable gloves for $215 plus $54 shipping. Below: Another listing shows a similar product offered for less than $25 with shipping included. (Credit: NBC Bay Area; Amazon)

We're hearing from viewers like you, too. Since March 1, our Telemundo and NBC Responds teams nationwide have seen a huge spike in price gouging complaints, with 106 in 25 days.

It's hoped those letters from state attorneys general will push online retailers to tighten their standards. Among other requests. the letters urge sellers to have actual humans -- not just computer algorithms -- review product listings for possible price gouging.

The attorneys general also want auction-style sales of essential items to stop, because panic bidding may be driving up prices.

CALPIRG associate Claudia Deeg told NBC Bay Area companies need to get ahead of the issue.

"Part of the problem is that Amazon and other online retailers are really playing whack-a-mole," Deeg said. "They’re addressing these instances of price gouging after they occur."

How to Report Price Gouging

Authorities say if you encounter suspected price gouging, you should report it. Many online sellers have a link on item listing pages that allow you to flag an item for review. Click here to learn how to report price gouging on eBay.

CALPIRG offers this guide to avoiding price gouging, and offers additional information on reporting it here.

You may also want to report apparent price gouging to the California Attorney General. You can do this at the Office of the Attorney General's website, or by calling 800-952-5225. You can also let us know by contacting us.

San Jose-based eBay said it is working closely with lawmakers and prosecutors.

"We have been closely monitoring the coronavirus pandemic as it continues to develop," an eBay spokesperson told NBC Bay Area via email. "As always, our first priority is to ensure the safety of our employees and customers around the world. eBay is taking significant measures to block or quickly remove items on our marketplace that make false health claims. We are making every effort to ensure that anyone who sells on our platform follows local laws and eBay policies."

eBay also said it is blocking the sale of items marked as coronavirus-related, and it's not letting sellers post items like masks and sanitizer. We checked, and found several auctions for those items, but when clicked, the listings pointed us to an error message.

UPDATE, MARCH 26: On Thursday, eBay posted new details concerning its efforts to identify and curb price gouging on its platform.

In addition to eBay, NBC Bay Area reached out to Amazon and all the other companies that received the letters from state attorneys general. Their responses are below.

Amazon pointed us to its price gouging blog, and added:

  1. We are already working with Attorneys state general and sharing information to help them hold price gougers accountable. (To date, we’ve already worked with 42 states attorney general before this letter was even released and this blog was released on Monday, well before this letter.)
  2. We have removed over half a million listings for price gouging and have taken action on over 3,900 sellers.
  3. We have also instituted additional manual audits of products in our stores due to the increased risk of price gouging from unscrupulous sellers seeking to evade our automated systems and take advantage of customers.
  4. Amazon leverages a number of automated and manual methods to detect potential price gouging in our store. Our selling partners submit billions of price changes every week and our automated tools scan them on an ongoing basis.

Additionally, wanted to share examples of how we are already working with AGs. For example, see this press release by Missouri’s AG and Georgia’s AG.

OfferUp: "We agree with the Attorney General’s position that marketplaces can play a role in monitoring and reducing illegal pricing behavior by sellers. We’ve been taking steps to monitor and remove illegally priced items since this situation developed, and have increased our efforts as the situation grew more serious - culminating in our prohibition and removal of all posts for all hand sanitizer, toilet paper, protective masks, and disinfecting items, regardless of price. In addition, we are working with local, state, and national authorities on any investigations they require our help for regarding sellers who have broken the law.

"We are monitoring for excessive prices through a mix of automated and manual review. For the time being, we are also removing all hand sanitizer, toilet paper, protective masks, and disinfecting items, regardless of price. These items are now prohibited on OfferUp."

Overstock: "We commend the California Attorney General for proactively reaching out to online retailers and marketplaces with specific suggestions to police price-gouging. We are already following the recommendations provided by General Becerra and will always be vigilant in our efforts to comply with laws, particularly price-gouging laws during this health crisis.

"We have been working closely with our suppliers to make sure they’re offering our customers fairly priced products delivered as quickly and safely as possible and removing products and vendors that don’t follow those guidelines from our platform. We’ve also removed the following products from our website; surgical masks, dust masks, N95 masks, KN95 masks, protective masks, surgical gloves, exam gloves, latex gloves, toilet paper, sanitizer or hand sanitizer, disinfecting cleaners, disinfecting wipes and disinfecting supplies, and asked suppliers of those products to do what they can to get their inventory to health care professionals. Additionally, we are working with our national charity partners and local health organizations through our Overstock Cares program to provide support and supplies as they continue to deal with the repercussions from the spread of COVID-19."

Shopify: "Price gouging is a violation of Shopify’s Acceptable Use Policy (AUP), unethical, and not aligned with our mission to make commerce better for everyone. Our teams continue to actively review COVID-19 related products and businesses, and stores that violate our policies will be immediately taken down. Over the past two weeks, we have closed more than 5,000 stores in our COVID-19 related reviews. We are closely following developments related to COVID-19 and the trust of our merchants and their customers remains our top priority."

Walmart: "One critical issue we have addressed, and continue to monitor in real time, is suspected price gouging. Walmart’s business model is Everyday Low Prices, Everyday Low Cost and we work hard to provide our customers with great prices. The prices we set are first and foremost based on our cost of goods and if you shop with us much, you will notice that they traditionally don’t vary significantly day over day, month over month. Given the unprecedented circumstances surrounding the Covid-19 pandemic, we have taken additional steps to ensure fair pricing to protect our customers:
Earlier this week the Walmart and Sam’s Club Home Offices (Home Office) implemented a systems based price freeze on certain products, including critical items like soaps, hand sanitizers, water, and cleaning supplies sold in our stores and clubs (Discount Stores, Supercenters, Neighborhood Markets and Sam’s Clubs). Pricing of product is established centrally at the Walmart Home Office and is coded into our Point of Sale (POS) system. The price freeze currently in place prevents prices from being raised or lowered by our Home Office Merchandising teams until the price block is lifted. Again, just to be clear on this critical point, prices in our POS system were “locked” earlier this week and we have taken no steps at the Home Office to unlock those prices. While the price freeze is in place, stores and clubs do not have the ability to independently change prices in our POS system, but can during individual transactions adjust the price of items to resolve
pricing discrepancies with customers. Stores and clubs are also able to raise the price of an item back to the original pricing established by the Home Office, if they previously marked down the item.
However, stores and clubs cannot systematically raise prices on items to levels that exceed the prices established by the Home office.
Please understand that if the current situation impacts Walmart’s cost of acquiring goods, the home office may need to adjust prices. If we believe a supplier is taking advantage of the situation and artificially inflating their prices to us, however, we will report that conduct to the proper authorities.
• ONLINE and also have implemented pricing measures to attempt to address price gouging concerns. For products sold by Walmart and Sam’s Club online, we are monitoring the prices on commodities and consumer household items to ensure that prices, which typically are dynamic and may fluctuate based on competitive pricing, remain at a reasonable level.
On Walmart Marketplace, which is a platform to enable third-party sellers to offer their products for sale to consumers, Walmart has a number of processes in place to attempt to prevent price gouging by third party sellers. First, Walmart requires all sellers to comply with its Pricing Policy. Although sellers price the items that they sell in their discretion, they are required to maintain fair pricing practices. Under our Pricing Rule, Walmart will automatically unpublish items that are priced
substantially in excess of prices recently offered on Walmart Marketplace or on competing sites, or that appear to be the subject of price gouging, or other unfair or abusive pricing practices.

"In light of the volatile circumstances surrounding the pandemic, beginning in January 2020, we reviewed relevant products and pricing to ensure that our automated rules were appropriately capturing new and existing items to protect against violations of our Pricing Policy. We also have amended our existing automated rules to review the entire catalogue of items to target any Marketplace items that appeared to make unauthorized medical claims related to the coronavirus, and automatically removed those items. The items removed in accordance with this rule often also violate the Pricing Policy.
We will continue to enhance these rules to take new issues or risks into account, including seller behavior that appears to attempt to circumvent our automated detection rules. In addition, we have tasked policy specialist teams to conduct systematic site searches and audit listings against the Pricing Policy and immediately remove items in violation. Finally, in addition to the removal of items, we have engaged in seller outreach and education to reinforce the Pricing Policy and its requirements. We also have strengthened our enforcement against sellers to combat potential price gouging, including suspending sellers, and restricting sellers from listing new items in certain categories."

Facebook: “Facebook is focused on preventing exploitation of this crisis for financial gain. Since COVID-19 was declared a public health emergency, Facebook has removed ads and commerce listings for the sale of masks, hand sanitizer, surface disinfecting wipes and COVID-19 test kits. While enforcement is not perfect, we have put several automated detection mechanisms in place to block or remove this material from our platform.”

Alibaba: An Alibaba spokesperson acknowledged NBC Bay Area's request for comment, but did not provide a statement by our deadline.

Craigslist did not immediately respond to NBC Bay Area's requests for comment.

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