Massive online retailer should be held responsible for price gouging
U.S. PIRG Education Fund
PHILADELPHIA— Amazon may monitor its marketplace for price gouging, but a new analysis by U.S. PIRG Education Fund has revealed that these checks don’t always succeed in preventing significant price hikes. With so many people worried about Coronavirus, the consumer advocacy organization looked at the prices for two types of increasingly popular products: hand sanitizers and surgical masks.
Researchers compared the average price for those items over three months to the high price on Amazon since the World Health Organization declared a global health emergency on January 30. As the outbreak became more widespread, the price of most of the sanitizers and masks rose at least 50 percent higher than the 90-day average. Even one in six products sold directly by Amazon — not third-party vendors using the online marketplace — saw prices rise at least 50 percent higher in February, as Americans became more aware of the Coronavirus.
“When people need something to stay healthy and prevent the spread of a potentially-deadly virus, merchants should follow the Golden Rule, not the money,” said U.S. PIRG Education Fund Consumer Watchdog Adam Garber.
Thousands of Americans have signed an online petition asking Amazon’s CEO Jeff Bezos to set hard price protections that prevent gouging before it happens, not play whack-a-mole with businesses trying to take advantage of an emergency.
The U.S. Surgeon General recently implored Americans to stop purchasing surgical masks because they don’t protect people from Coronavirus. Despite that expert advice, people concerned about the outbreak are still buying masks, and sellers are taking advantage of the situation.
The pricing analysis was based on dozens of items featured in Amazon searches for “surgical masks,” “surgical masks antiviral disposable,” and “hand sanitizer”. Findings include:
The prices for more than half the examined products spiked by at least 50% compared to the average price. At times, the cost of these products would spike 2.3 times higher than the 90-day average and in total the 30-day average climbed 18.5 percent since the WHO declaration.
These products’ average high price was 220% higher than their 90 day average. The same class of Amazon products saw a smaller, but still significant, increase for these products averaging 65 percent greater than the 90-day average.
The average lowest available price over 30 days for new versions of the reviewed products increased by 18 percent over the 90-day average.
While these higher prices impacted surgical masks and hand sanitizers, the former saw more significant price increases. The average high price of surgical masks was 166% higher than the 90-day average price.
While state laws vary widely, they generally look at the average price for needed commodities prior to the state of emergency and high prices offered during it. Many statutes allow for price increases to address shortages, some of which limit those increases to 10%-30% above prices prior to the emergency.
Pennsylvania, Florida, San Francisco, and other regions have declared states of emergency as Coronavirus cases have appeared in those areas. Price gouging protections generally go into effect in a state of emergency, but it’s often tough for local authorities to enforce such statutes with so many products for sale online.
Amazon has its own standard, called the Fair Pricing Policy. The retail marketplace monitors products sold on its website for violations, including setting a price “that is significantly higher than recent prices offered on or off Amazon.” The company recently removed more than 1 million products for violating its policies. But even the company’s own products are seeing prices increase and spike, suggesting the company needs to improve its controls.
“A trillion dollar company with such advanced technology surely can better figure out how to cap price increases during international emergencies such as the Coronavirus outbreak,” finished Garber. “Elected officials shouldn’t wait for another panic to investigate how online platforms may be enabling price gouging.”