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Consumers Sue Amazon for Alleged Price Gouging

Amazon
Consumers Sue Amazon for Alleged Price Gouging

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.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

2 thoughts on “Consumers Sue Amazon for Alleged Price Gouging”

  1. “by focusing on the store, Amazon”

    This just goes to show how confused lawmakers are about how eCommerce really works. Amazon is NOT a store. It is a MALL where individual stores sell their wares.

  2. Amazon is not a store? That’s the most ignorant statement I have heard. Amazon is as much a store as every other seller on their platform. Amazon sells items, amazon collects the payment and customer Information for every other store on their platform also. I don’t know of any mall that collects the payment and customer information, dictates return policy, dictates refunds, takes a percentage of every sale, or collects sales tax on behalf of the shops within it.

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