Consumers in California filed a federal lawsuit against Amazon for alleged price gouging during the coronavirus pandemic, according to Law360.
The publication for law professionals said the lawsuit claims high-demand items – including face masks and cold remedies – showed “flagrantly unlawful” price increases. The lawsuit also cited an increase of 672% in price for black beans, from $3.17 to $24.50.
In mid-March, Amazon had posted about its practices to vigorously combat price gouging. And in his annual letter to shareholders published recently, founder and CEO Jeff Bezos tackled the issue, writing:
“Amazon is acting aggressively to protect our customers from bad actors looking to exploit the crisis. We’ve removed over half a million offers from our stores due to COVID-based price gouging, and we’ve suspended more than 6,000 selling accounts globally for violating our fair-pricing policies. Amazon turned over information about sellers we suspect engaged in price gouging of products related to COVID-19 to 42 state attorneys general offices. To accelerate our response to price-gouging incidents, we created a special communication channel for state attorneys general to quickly and easily escalate consumer complaints to us.”
The company declined to comment on the California lawsuit but provided Law360 with a statement that it has been monitoring its store 24/7 and has removed hundreds of thousands of items for attempted price gouging. You can read all the details in the Law360 article.
In the meantime, Tennessee’s Attorney General office reached a resolution with the seller who became the face of pandemic pricing after the New York Times ran an article about having acquired 17,000 bottles of hand sanitizer to resell on Amazon.
According to the AG’s press release, the sellers cooperated with investigators and surrendered all their supplies to a nonprofit organization in Tennessee. “They also agreed to distribution of a portion of the supplies to officials in Kentucky.”
“In the settlement, the Colvins are prohibited from selling emergency or medical supplies grossly in excess of the price generally charged during any declared state of abnormal economic disruption related to the COVID-19 pandemic,” the announcement stated.
But some third-party merchants object to how state Attorneys General are handling reports of alleged price gouging by Amazon sellers. Paul Rafelson of the Online Merchants Guild published an open letter to State Attorneys General earlier this month criticizing states for failing to hold Amazon accountable for price gouging and claiming it was unconstitutional for states to be pursuing Amazon merchants rather than Amazon itself.
Rafelson told EcommerceBytes at the time that merchants are unable to set prices on a state by state basis on Amazon. “Price gouging laws are state specific,” he explained. “A Florida price gouging law cannot limit one’s ability to sell goods in 49 states.”
“Had the states applied these laws as intended by focusing on the store, Amazon, they wouldn’t be running afoul of the constitution” – and they would also be more effective in preventing price gouging, Rafelson said.