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SACRAMENTO -- 31 California legislators, led by Assemblymember Kansen Chu (D-San Jose), are calling on the country’s top online marketplaces to crack down on price gouging amidst the novel coronavirus (COVID-19) outbreak. Together, 346 legislators representing 45 states, joined CALPIRG Education Fund in sending a letter Tuesday urging Amazon, Craigslist, eBay, Facebook and Walmart to quickly implement preventative measures on their platforms to ensure that consumers don’t get taken advantage of during this public health crisis. Less than two weeks ago, 33 attorneys general, including Calif. AG Xavier Becerra, sent a similar letter to the same companies.
“We believe you have an ethical obligation and patriotic duty to help your fellow citizens in this time of need by doing everything in your power to stop price gouging in real-time,” the letter reads, in part.
Since the beginning of the outbreak, the cost of critical health supplies has spiked dramatically on online platforms. An analysis last month from the U.S. PIRG Education Fund found that existing monitoring on Amazon’s platform was not preventing significant price hikes. In particular, the cost of most hand sanitizers and masks rose at least 50 percent higher than the 90-day average. Since then, more than 335,000 Americans have signed PIRG’s petition calling on Amazon to protect consumers from price gouging.
Gov. Gavin Newsom’s recent executive order, signed on April 3rd, expands upon California’s existing price gouging laws, and clarifies that they should be enforced through at least September 4, 2020.
However, the online marketplaces must do more to police their own platforms, because despite some steps taken by companies, exorbitant price increases are still occurring. In just the last week, U.S. PIRG Education Fund highlighted numerous examples of price gouging, including:
Toilet paper for $98 for a box of rolls, nearly three times its normal price.
Three boxes of 20 N95 masks for $239 or $3.98/masks compared to a normal price of $1 per mask.
A digital thermometer for $27, but has an average price of $17.99 over the last 180 days.
“Californians are already worried about their health and the health of their loved ones during this pandemic. They shouldn’t also have to worry about being ripped off on the critical supplies they need to get through it,” said Claudia Deeg, CALPIRG Education Fund Associate. “We’re grateful for so many legislators in California and the 346 state elected officials nationally who are standing up for consumers during this crisis. Elected officials shouldn’t wait any longer to investigate how online platforms may be enabling price gouging.”
“Everyday consumers like you and I are being taken advantage of during a time of intense stress and uncertainty,” said Asm. Kansen Chu. “Caring for ourselves and loved ones during this time is stressful enough. We should not have to worry about online sellers taking advantage of our desperate need for supplies. I am urging the five largest online retailers to do more by taking necessary actions to protect consumers from these exploitative practices.”
Specifically, state legislators from 45 states -- with the support of CALPIRG Education Fund -- are calling on companies to:
Set policies and enforce restrictions on unconscionable price gouging during emergencies. Online retail platforms should prevent unconscionable price increases from occurring by creating and enforcing strong policies that prevent sellers from deviating in any significant way from the product’s price before an emergency. Such policies should examine historical seller prices, and the price offered by other sellers of the same or similar products, to identify and eliminate price gouging.
Trigger price gouging protections independent of, or prior to, an emergency declaration. Price gouging on a platform often begins prior to official emergency declarations. Companies should trigger the above protections when its systems detect pricing spikes generally, or conditions that could lead to price gouging like pending weather events or future possible health emergencies.
Create and maintain a “Fair Pricing” Page or Portal where consumers can report price gouging incidents to companies directly. A simple tool requesting the name of the vendor, the item for sale, the alleged unfair price, and the state of residence of the complainant would quickly and efficiently allow companies to identify and freeze or remove truly bad actors and make appropriate referrals for enforcement or prosecution. These complaints should be made available upon request by offices of the attorneys general.
“With their vast technological prowess, companies have the ability and the moral obligation to take aggressive action to prevent exploitative price gouging -- at all times, but especially during this crisis. These few potential solutions should be seen as just the beginning,” finished Deeg.
To learn more about how to identify and report price gouging, go to CALPIRG Education Fund’s website.
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