Coronavirus has consumers making an ‘extraordinary’ number of price-gouging complaints
Pennsylvanians have filed almost 4,500 complaints with the state Attorney General’s office claiming price gouging. In New Jersey, consumers have filed more than 3,900 complaints.
One store in Philadelphia doubled the price for a pack of face masks to $50. Another charged $16 for 24 bottles of water that typically sell for less than $10. In Chester, a grocery store hiked the price for a six-pack of paper towels from $7 to $10.
Those are just some of the almost 4,500 complaints that Pennsylvanians have filed with the state Attorney General’s office claiming price gouging during the coronavirus pandemic. In New Jersey, consumers have filed more than 3,900 price-gouging complaints, almost all alleging unlawful increases on essentials such as food, water, and cleaning products.
“We’ve never received this many comments or tips about a specific subject matter,” Pennsylvania Attorney General Josh Shapiro said in a recent interview. He called the volume of complaints “extraordinary.”
Price gouging has emerged as the top consumer gripe during the pandemic, as shoppers see costs rise for items they need to stay healthy at home. State attorneys general have sprung into action, sending subpoenas and cease-and-desist letters to retailers. But many price increases aren’t actually illegal, as merchants face higher costs to deliver goods.
The price hikes have been particularly egregious online, where third-party sellers using Amazon, Craigslist, Facebook, and other sites have sold masks and hand sanitizer at sky-high levels
A recent report by the U.S. Public Interest Research Group (PIRG), a consumer advocate, found prices up at least 50% for some hand sanitizers and face masks from sellers on Amazon. In one case on Craigslist, a two-liter bottle of hand sanitizer cost $250 — 10 times the regular going rate, according to a March letter from 33 state attorneys general.
“It’s wrong for companies to engage in price gouging at a time when people have enough to worry about," said Emma Horst-Martz, of Pennsylvania PIRG. Referring to the platforms sellers use such as Amazon and Facebook, Horst-Martz added: "We believe they have the ability to stop it and protect consumers at such a vulnerable moment.”
The tech and retail giants say they’re removing bad actors from their platforms and working with authorities to combat price gouging. Amazon said it turned over information to Shapiro’s office about almost 100 unreasonably high-priced items from more than a dozen local sellers.
“While enforcement is not perfect, we have put several automated detection mechanisms in place to block or remove this material from our platform,” a Facebook spokesperson said.
Both Pennsylvania and New Jersey have laws that restrict price increases during a state of emergency. Pennsylvania prohibits companies from charging more than 20% above the average price of a good sold in the week before the emergency declaration. New Jersey’s law bans price increases that are more than 10% higher than what was charged during the normal course of business — unless the increase is due to higher costs to provide the product.
Pennsylvania’s law applies to retailers, wholesalers, and distributors, and doesn’t have exemptions or exceptions, Shapiro said. Still, he has advised his office to avoid long legal battles and contact merchants to resolve issues quickly, telling retailers to “cut it out” if complaints are true.
Most of the time, the retailers do.
“You'll know it when you see it,” Shapiro said of his advice to consumers. “You'll see something where the price seems very high. And we want you to report that to us.”
As of Friday, the New Jersey Attorney General’s office had issued 92 subpoenas seeking additional information from retailers and online marketplaces over alleged unfair price increases and sent 731 cease-and-desist letters warning businesses. Pennsylvania had sent 377 cease-and-desist letters as of Tuesday.
Businesses contacted by Shapiro’s office have cited higher prices they’ve faced from wholesalers or distributors, and broader price fluctuations for certain goods across the country, such as eggs.
Supply shortages and over-purchasing by consumers have contributed to price hikes, said Paul Martino, of the National Retail Federation, a trade group. The pandemic has also created more operational costs for merchants, as retailers clean stores more and install plexiglass or other fixtures to follow social-distancing guidelines, he said.
“Where the prices really are a reflection of the market, that’s not by definition price gouging under state laws and shouldn’t be under federal laws,” Martino said.
Pennsylvania’s and New Jersey’s price gouging laws were designed for regional short-term emergencies such as hurricanes, not a global pandemic that disrupts the national supply chain for a longer time, said Jeffrey Jacobson, a former director of the New Jersey Division of Law who is now a defense lawyer in consumer fraud cases at Faegre Drinker Biddle & Reath. Anticipating lawsuits, he’s calling for regulatory guidance from states.
“The problem is it’s not just attorney general investigations,” he said. “You’ve got plaintiffs’ lawyers who have all the time in the world.”
The Pennsylvania Attorney General’s office is asking consumers to send price-gouging complaints to firstname.lastname@example.org. In New Jersey, report complaints at https://covid19.nj.gov/violation