knock it off —
Supply and demand get out of hand and cross the line quickly in a crisis.
As the nation and the world reel from the COVID-19 pandemic, many goods are in short supply and high demand. That basic economic formula means prices are going up—way up. Among the nation’s largest digital storefronts, a combination of individual sellers out to make bank and algorithmic pricing that may or may not have a basis in reality has resulted in a wave of exploitative price gouging that state and federal regulators are trying to put to a stop.
Attorneys general representing 33 US states and territories yesterday signed letters (PDF) urging online retailers to set and enforce policies banning price gouging on their platforms during this emergency.
“While we appreciate reports of the efforts made by platforms and online retailers to crack down on price gouging,” the attorneys general wrote to Amazon, Craigslist, eBay, Facebook, and Walmart, “we are calling on you to do more at a time that requires national unity.”
Hand sanitizer and face masks in particular are susceptible to price gouging, the AGs wrote, with reports that prices went up at least 50 percent higher than average on Amazon while individuals on Facebook and Craigslist were selling bottles of Purell for as much as $250.
The problem, they write, is that the platforms tend to be reactive rather than proactive—the issue digital platforms tend to face with all kinds of moderation at scale. “Rather than playing whack-a-mole to stop price gouging after it has already occurred, online retail platforms should prevent unconscionable price increases from occurring in the first place by creating and enforcing strong policies that prevent sellers from deviating in any significant way” from a product’s usual base price.
The AGs also acknowledge that some listings will still likely slip through, and they urge all the platforms to create easy “fair pricing” portals or landing pages where consumers can quickly and easily report incidents of price gouging directly to retailers when they come across them—and where the retailers themselves can easily collect the data to pass along to the states.
The White House is also trying to take action on opportunistic price gouging. The administration earlier this week issued an executive order “preventing and punishing hoarding and fraud” of critical healthcare supplies. Enforcement of the order falls to the Department of Health and Human Services and the Department of Justice.
To that end, the DOJ launched a task force dedicated to ferreting out price gouging, as well as other kinds of hoarding, frauds, schemes, and fakery.
“Capitalizing on this crisis to reap illicit profits or otherwise preying on Americans is reprehensible and will not be tolerated,” read a Tuesday memo (PDF) from Deputy Attorney General Jeffrey Rosen.
In response, eBay, Amazon, Facebook, and Walmart all issued statements explaining their actions to date. eBay, for example, banned listings for hand sanitizer and disinfectant wipes and is removing listings that reference COVID-19. Facebook said it removes similar listings from its Marketplace. Amazon likewise said it has removed about a half-million third-party listings for price gouging, and Walmart said it automatically takes down listings with prices too far above average.