Why price gouging during a crisis is unacceptable

The world has changed dramatically in the last few months. Since the first American case of novel coronavirus (COVID-19) was reported on January 19th, there have been nearly 375,000 confirmed cases[1]  and more than 12,000 deaths in the U.S. By the time you’re reading this, tragically, those numbers will have undoubtedly increased.

Many of us are afraid for our health and safety. That fear -- along with the need to comply with our shelter in place order -- has led Californians to stock up on essential items such as toilet paper and cleaning wipes. In the face of this public health crisis, no one should be worried about overpaying for these critical supplies -- yet that’s exactly what’s happening.

A recent analysis by U.S. PIRG Education Fund found prices for many hand sanitizers and surgical masks on Amazon spiked by at least 50 percent at some point since the World Health Organization declared a public health emergency. As recently as April 1st, a box of 20 N95 masks cost $239 (nearly 4 times the normal price), and six rolls of toilet paper cost $98 on Amazon (3 times normal).

Businesses will tell you that the market is responding to increased demand, and that costs increase to ramp up manufacturing and expedite delivery. But there is another term for this practice -- profiteering. When prices for essential products climb 220 percent above their 90 day average, those explanations look as ridiculous as a $459 small bottle of hand sanitizer. Exorbitant prices have also been seen on eBay, Walmart and Craigslist.

California law already prohibits any business from increasing prices for essential goods or services by more than 10 percent during a declared state of emergency. Expanding on that law, Gov. Gavin Newsom’s recently signed an executive order expanding upon the existing law and extending enforcement through at least September 4, 2020. Orange County District Attorney Todd Spitzer also condemned price gouging in a recent statement and stated that “exploiting the public’s panic is not a defense to engaging in criminal activity.”

All businesses -- online and offline -- have both moral and legal obligations to our broader society during a time of crisis. And we expect a trillion-dollar company such as Amazon to set a high standard for others to follow. While Amazon says it monitors sellers and “there is no place for price gouging” on its online marketplace, its policing efforts are inadequate -- amounting to a game of whack-a-mole.

Because monitoring so many listings is so difficult, when Amazon removes one product, sellers mark up prices on other products or create new listings. The net result is that many consumers desperate to find cleaning supplies to help prevent COVID-19 infection pay far more than they should have to.

That’s exactly why a bipartisan group of 31 California legislators, including myself, joined a total of 346 state legislators from 45 states in calling on the top online marketplaces to fulfil their ethical and patriotic duty to prevent price gouging before it happens. Calif. Attorney General Becerra sent a similar letter two weeks ago. The letter calls on the retailers to set price ranges during emergencies for certain critical supplies, limit increases to a certain percentage over the 90-day average, and use their technological prowess to develop a better solution.

If we don’t quickly fix this problem, it’s going to happen again. During each crisis, whether an outbreak or natural disaster, Americans have enough safety issues to worry about. In the midst of a pandemic that could kill more than 100,000 Americans, and has already infected over one thousand here in Orange County, we need retailers to crack down on this exploitative practice and end price gouging now.