Three Months Into The Pandemic Price Gouging Is Still A Real Problem

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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 [/tags/amazon/ 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: [/news/covid-19-surcharge-why-youre-seeing-extra-fees-on-your-bill/ COVID-19 surcharge: Why you're seeing extra fees on your bill]  

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 [/tags/ebay/ 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.

"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.

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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."

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In late March, mentioning the US PIRG report, a [ group of 33 state attorneys general], co-led by Shapiro, called on Amazon, Facebook, eBay, [/tags/walmart/ 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.