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Three months into the pandemic, price gouging is still a real problem

CNET logo CNET 6/18/2020 Ben Fox Rubin
a close up of a bottle: Hand sanitizer remains one of the most sought-after items of 2020 and one of main targets of price gougers. Nicholas Kamm/AFP via Getty Images © Provided by CNET Hand sanitizer remains one of the most sought-after items of 2020 and one of main targets of price gougers. Nicholas Kamm/AFP via Getty Images

We're three months into the pandemic, but it's still easy to find examples of price gouging on Amazon . Last Friday, within five minutes, CNET found Cottonelle toilet paper listed on Amazon for $57.42 (price for the same item on Target: $21.49), and a two-pack of 28-ounce jars of Rao's marinara sauce for $29.04 (an adjacent listing of 24-ounce jars from Amazon-owned Whole Foods would cost you $10.78).

The problem isn't confined to Amazon's massive digital storefront. It's pretty much everywhere.

By early June, Pennsylvania Attorney General Josh Shapiro's office received 5,000 complaints about price gouging during the pandemic. That's compared with about 27,000 consumer complaints on all topics that his office typically receives in a whole year.

"To get 5,000 in basically what's been two months on one specific topic is extraordinary," Shapiro said in an interview.

His office is part of a growing effort by authorities and major retailers to tamp down price gouging, as complaints have spiked in recent months. These organizations can point to thousands of wins to prevent this practice, with attorneys general sending out mountains of successful cease-and-desist orders and Amazon suspending more than 6,000 seller accounts.

Read: COVID-19 surcharge: Why you're seeing extra fees on your bill  

a close up of food: Last Friday, a search for "Rao's Homemade Marinara Tomato Sauce" found a seller listing a two-pack for nearly $30 right next to a Whole Foods listing that would cost consumers just a third of that for essentially the same product. Screenshot from Amazon © Provided by CNET Last Friday, a search for "Rao's Homemade Marinara Tomato Sauce" found a seller listing a two-pack for nearly $30 right next to a Whole Foods listing that would cost consumers just a third of that for essentially the same product. Screenshot from Amazon

But toilet paper and marinara sauce listings show that while efforts to curb price gouging have had an impact, consumers can still run into problems. Retailers like Amazon and eBay will need to stay focused on pricing to keep their customers' trust and ensure they aren't caught flat-footed the next time there's a supply shortage or emergency situation. Consumers, meanwhile, will have to stay vigilant, since price gougers keep changing their tactics to follow surges in demand during the pandemic.

a bottle on the counter: Hand sanitizer remains one of the most sought-after items of 2020 and main targets of price gougers. © NICHOLAS KAMM/AFP via Getty Images

Hand sanitizer remains one of the most sought-after items of 2020 and main targets of price gougers.

"While there's been a lot of progress, it was so egregious early on -- like in the end of February, March, April -- that while it's better now it's still really disappointing," said Ryan Stark, co-founder and chief product officer of Popcart, which provides a price tracking tool for consumers. "I definitely think the platforms, you know, the Amazons, the eBays, the Walmarts of the world can do a lot more here."

A $250 hand sanitizer bottle on Craigslist

Price gouging isn't a new problem, but it's one that's become more widespread and troublesome during the coronavirus pandemic since some sellers will sharply raise prices on items that are needed for safety, like hand sanitizers, or for the inevitable, like toilet paper. The issue is also especially problematic with tens of millions of people out of work and trying to stretch every dollar on essential goods.

In the early days of the pandemic in February and March, prices for face masks, toilet paper, sanitizer and wipes spiked amid a rush by consumers to stock up ahead of stay-at-home orders. Plenty of sellers took advantage by raising prices, and platforms like Amazon and eBay struggled with a flood of listings of overpriced goods. US PIRG, a nonprofit consumer watchdog, came out with a study in early March highlighting the problem. It found prices spiked for most of the 100 items it reviewed on Amazon by more than 50%, with price rises for face masks and hand sanitizers sold directly by Amazon itself and by third-party merchants on its site.

In response to the US PIRG report, an Amazon spokeswoman said that when the company sees an error, "we work quickly to fix it."

In late March, mentioning the US PIRG report, a group of 33 state attorneys general, co-led by Shapiro, called on Amazon, Facebook, eBay, Walmart and Craigslist to do a better job tamping down price gouging. They cited a two-liter bottle of hand sanitizer on Craigslist for $250 and packs of face masks on eBay for $40 to $50. 

Stark, from Popcart, said price gouging has continued to migrate to new areas to follow consumer demand. It started in paper goods and cleaners, but price gougers have now made their way to work-from-home categories like webcams and to summer recreation equipment like inflatable swimming pools, which are in high demand amid stay-at-home orders. He added that price gougers have also figured out new methods, like hiding extra fees in the shipping cost, which can fool e-commerce companies' automated systems.

In another situation, The Verge found sellers listing common items as "collectibles" to avoid price gouging monitors. Early into the pandemic, there were serious problems with hoarding, including a now-famous example of two Tennessee brothers buying up 17,000 bottles of hand sanitizer from local stores and trying to flip them for profit on Amazon. Amid a public backlash, they donated their supplies and reached a settlement with the state attorney general to avoid prosecution and a fine.

Coronavirus reopenings: How it looks as lockdowns ease around the world

a group of people sitting around a car: May and June have seen the tentative, gradual reopening of schools, retail outlets and houses of worship around the globe. The extent of the easing varies from country to country and city to city. But one thing is for sure: Most parts of the world look very different than they did just a few months ago and likely will for some time. Here are some examples. On June 6, delegates at a conference for German political party SPD Dortmund display paper ballots from the windows of their cars. The party is holding its conference, and the assembly of representatives before the local elections, at an open air drive-in cinema in western Germany to minimize the risk of coronavirus infection. Most restrictions on public life in Germany due to COVID-19 have now been lifted.

May and June have seen the tentative, gradual reopening of schools, retail outlets and houses of worship around the globe. The extent of the easing varies from country to country and city to city. But one thing is for sure: Most parts of the world look very different than they did just a few months ago and likely will for some time. Here are some examples. On June 6, delegates at a conference for German political party SPD Dortmund display paper ballots from the windows of their cars. The party is holding its conference, and the assembly of representatives before the local elections, at an open air drive-in cinema in western Germany to minimize the risk of coronavirus infection. Most restrictions on public life in Germany due to COVID-19 have now been lifted.
© Provided by CNET

To avoid price gouging, Stark suggested people do at least one price comparison before buying online to confirm the cost isn't inflated. That can be done using Popcart, CamelCamelCamel or Keepa, or just checking another major retailer's website. Also, while sites like Amazon, which host millions of independent merchants, have struggled to contain price gouging, traditional retailers that don't have big third-party marketplaces haven't faced the same problem, Stark said, so shopping with Kohl's or Target could help avoid some of these problems.

Checking per-unit prices also help to compare costs for slightly different sized items, like a 20-ounce jar of peanut butter versus a 32-ounce jar.

Fines, cease-and-desist orders, and calls for new laws

The group of attorneys general has called on major retailers to do more monitoring of price hikes on their sites and provide a place for consumers to complain about price gouging. Shapiro said this effort has prompted Amazon to refer more price gouging problems to law enforcement and track its pricing more closely, which he said has resulted in a marked improvement. 

Attorneys general, he said, also got 3M more involved in preventing price gouging of the masks it makes. This month, the company sued a merchant selling its masks on Amazon for 18 times their list price: $23.21 each instead of $1.25.

Amazon said it's started more manual audits of products to catch price gougers who work to evade its automated systems. The company is also working directly with attorneys general in 10 states on this issue.

"There is no place for price gouging on Amazon, and that's why our teams are monitoring our store 24/7 and have already removed more than half a million offers for attempted price gouging," the Amazon spokeswoman said in a statement. "We are disappointed that bad actors are attempting to take advantage of this global health crisis and have also suspended more than 6,000 selling accounts for violating our fair pricing policies and referred hundreds of the most egregious bad actors to law enforcement."

Looking to future emergencies, Amazon in May called on Congress to pass national standards for price gouging laws, since the current patchwork of state laws is hard for retailers to navigate. Amazon mentioned that two-thirds of states prohibit price gouging only during times of crisis, like an official state of emergency, and the definition for price gouging can vary, defined as a 10% hike in California or an  "unconscionably excessive" price increase in New York.

Shapiro said a federal standard would help, but he was skeptical such a law was likely under the Trump Administration. He said he's seen the White House move to weaken consumer protections, like hampering the Consumer Financial Protection Bureau, not strengthen them.

eBay said it's blocked or removed over 20 million items that are price gouging or claiming to stop or cure coronavirus. It's also working directly with state attorneys general on the problem.

These efforts are helping, but it's important consumers not let their guard down. Shapiro said that while his office is now primarily focused on following up every price gouging tip it receives, he has found price gouging spread throughout the commonwealth and split across online, big box and corner stores.

In one example, Shapiro's office reached a settlement with Nature's Garden in Reading, after the retailer sold two-packs of face masks for $23.95 per pair. The store agreed to pay $1,400 in civil penalties and $224 in restitution to customers.

I definitely think the platforms, you know, the Amazons, the eBays, the Walmarts of the world can do a lot more here.
Ryan Stark, co-founder of Popcart

New York Attorney General Letitia James' office said it's sent more than 1,500 cease and desist orders to wholesalers and merchants of essential products like bread and diapers, with the vast majority of complaints stemming from New York City.

Anyone who wants to report potential price gouging problem can contact their state attorney general. Pennsylvania set up a specific email address for the problem at pricegouging@attorneygeneral.gov and New York consumers can submit coronavirus-related reports online. Also, eBay has a webpage to report listings.

"We are simply not going to tolerate you taking advantage of people during this pandemic," Shapiro said. "Pennsylvanians have a legal right to fair pricing on essential goods, small businesses have a right to fair pricing on essential goods. And if you interfere with that and break the law, we will hold you accountable."

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