Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Sun Apr 26 2020 00:15:41

When Selling Face Masks Becomes a Federal Crime

By: Ina Steiner

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If you sell personal protective equipment (PPE) such as face masks, beware! The Feds have charged a seller in New York who sold PPE in his retail store and online with violating the Defense Production Act of 1950, and if found guilty, he could serve up to 1 year in prison.

In its complaint against the retailer, the government noted the rapidly dwindling stock of PPE needed by healthcare providers to care for seriously ill patients with COVID-19, and pointed to the President's Executive Order declaring that "health and medical resources needed to respond to the spread of COVID-19, such as personal protective equipment and sanitizing and disinfecting products, are not hoarded."

The seller sold sneakers and apparel at his retail store, but the government said in mid-March, he began accumulating PPE. An excerpt of the Department of Justice (DOJ) press release claims that between March 25 and April 8th, the retailer allegedly received deliveries of disposable face masks, disposable surgical gowns, hand sanitizer, and digital thermometers at his retail store and warehouse. 

The DOJ alleged the retailer advertised and sold PPE at prices "far in excess of prevailing market prices." For example, three-ply disposable face masks purchased for a per-unit price of $0.07 were resold for a per-unit price of $1.00, it alleged.

The government said Postal Inspectors executed a search warrant at the seller's New York retail store and warehouse on April 14, 2020, and seized 23 pallets containing more than 100,000 face masks, 10,000 surgical gowns, nearly 2,500 full-body isolation suits and more than 500,000 pairs of disposable gloves.

In its press release, the US Attorney's Office for the Eastern District of New York said the retailer's "amassing of critical personal protective equipment during a public health crisis and reselling at huge markups places him squarely in the cross-hairs of law enforcement armed with the Defense Production Act." It also noted that the charges in the complaint were allegations, and the defendant is presumed innocent unless and until proven guilty.

Law360, which reported on the case on Friday, said it was the first case involving hoarding and price gouging to invoke the Defense Production Act of 1950 during the current public health crisis.

The defendant's lawyer spoke with Law360 and said he called into question the legality of the DOJ's move, characterizing the allegations as "unconscionable and unsustainable in a court of law." 

The Department of Justice has taken President Trump's Executive Order seriously, and US Attorney General Barr created a task force to address COVID-19-related market manipulation, hoarding, and price gouging.
 
As far as federal prosecutors are concerned, the regular rules of retail and liquidation do not apply to items like face masks that are in short supply due to the pandemic - consider yourself warned.



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Readers Comments

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by: shut1968 This user has validated their user name.

Sun Apr 26 00:45:58 2020

Damn.. cheaper than the gas station by me.. they charge $2.99 per face mask.. Ebay sellers are getting $10 bucks per face mask.. seems like they were a bargain at $1

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by: purpleiris This user has validated their user name.

Sun Apr 26 02:23:15 2020

It's one thing to amass the inventory the public needs, but an entirely different thing to take advantage of a crisis for self-serving purposes. Kind of like Amazon.

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by: comments This user has validated their user name.

Sun Apr 26 02:46:01 2020

This one is a 50/50 split for me. Price gouging is reprehensible and so is hoarding needed PPE. However, the false claims to justify seizures made by officials about face masks somehow only protecting healthcare workers don't justify taking the small glimmer of hope the public has for trying to acquire masks to protect themselves.

If I am left with the choice of being gouged or potentially getting sick then I choose to be gouged.

In all honesty those 3 ply masks aren't enough to help a heavily exposed healthcare worker anyway, but could have some potential benefit to those walking past someone who happens to sneeze and shoot some droplets my way.

I tell you what though......I really would like to be able to provide some masks for my senior parents but any I already tried to buy on ebay were not received.  

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by: Snapped This user has validated their user name.

Sun Apr 26 09:03:26 2020

There is a fine line between marketplace prescience and advantaging crisis. In some cases, microscopic. This one, So ‘novel’, the inevitable legislation remoras are still practicing their attachments.

This case is made visible by scale though. Some irony there. But no more than the scale of real impact by something so small we all face right now.. By that measure, the ‘rules’ for the greater good may overrule.

So then - Had that seller perhaps withheld enough ‘reasonable’ (good luck with that one) to make a living, and ‘donated’ the bulk to the cause - with accompanying fanfare of course - would this allegation then apply?

Or are the speeders not getting ticketed enough mitigation? Depends who ya know, dont’cha know.

Speaking of government seizures, last week a private plane convoy had to stealth in a load of PPE being donated to Atlanta responders and medicos. So the feds wouldn’t grab it to hoa...er...stockpile it.

Now that’s a warning.

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This user has validated their user name. by: iheartjacksparrow

Sun Apr 26 09:58:08 2020

@shut1968 - $2.99 per face mask is cheap. In Los Angeles, on seemingly every street corner, are face mask sellers charging $5 each mask. They are probably the same people that used to sell bags of oranges and bouquets of flowers.  

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by: Rosebud52 This user has validated their user name.

Sun Apr 26 18:19:19 2020

Made my own on the sewing machine.

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This user has validated their user name. by: Bill

Mon Apr 27 00:27:28 2020

All the convenient stores around here (Illinois and Wisconsin border) sell masks for $1.99. Was looking for disinfectant wipes on line since Walgreens never gets them in the store but you can buy them on line container of 75 for $9.99 when they used to sell for $2.99.
I use flour sack towels and make a full face bandana or you can get neck gators like the military uses.  

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by: Diogenes This user has validated their user name.

Mon Apr 27 04:51:29 2020

Seems to me like a not unreasonable profit compared to what others are charging. There are always some who will gain in any dire situation, Business is business.

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by: Jester This user has validated their user name.

Mon Apr 27 07:01:44 2020

I think some of this governmental overreach did more harm than good and shut down in some cases whole sites from selling much needed safety items. I think they need to rethink and make clear the parameters of the law so that the flow of needed products are not impeded from getting to the people that need the products fast. Many sites like Amazon just stopped all sales for a period because the could not police it properly. And since many people hoarded to sell these the mass blocking of the flow to the general public was epic. What they claimed was price gouging in some cases seems not to be IMHO. I would have bought masks for $1 each if I could have gotten them quickly.

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by: felyne This user has validated their user name.

Mon Apr 27 08:57:34 2020

My first thought was, what the hell have hospitals been doing to us for all these years? $10 for an aspirin?! And how about the defense dept? I remember $34 for a nut and bolt? How about the Pharma Cartel? $.07 to make a Prozac pill when they sold one for $10 before they went generic. I get it, I know ppl need the masks, but now is the time to review how we've been getting screwed, (with gov't blessings), and do something about it. They always said it's 'capitalism'. How many died b/c they couldn't get Insulin? But that's OK with them. Taxpayers pay for Pharma R&D. Then we pay for the meds. OK, off my soapbox.  

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by: railady This user has validated their user name.

Mon Apr 27 14:38:29 2020

Don't forget the toilet seats and latrine covers ........  
https://www.washingtonpost.com/business/capitalbusiness/the-air-fo
rces-10000-toilet-cover/2018/07/14/c33d325a-85df-11e8-8f6c-46cb43e3f306_story.html

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by: COVID-19 This user has validated their user name.

Wed Apr 29 02:16:30 2020

Price gouging wouldn't be possible if the masses weren't such cowards.  



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