Online auction retail marketplace eBay has been accused of facilitating the sale of excessively priced COVID-19 -related products in a class action complaint. eBay allegedly violated California’s Unfair Competition Law, California’s Consumer Legal Remedies Act, as well as and unjust enrichment.
Plaintiff Jeanette Mercado states that in light of the COVID-19 pandemic “unscrupulous sellers opportunistically prey upon the public by gouging prices of essential items,” such as masks, disinfectants, and hand sanitizers.“to unconscionably profit off of vulnerable and fearful consumers during these unprecedented times.” Mercado stated that eBay’s efforts to stop price gouging on its platform have not been fruitful. “While eBay publicly states that it is trying to stem the use of eBay’s platform by sellers who have charged, and continue to charge, gouging rates to consumers across the country, eBay’s very business model not only allows but encourages such price gouging to eBay’s financial benefit.
“[I}n addition to charging fees for initially listing items, eBay charges a ‘final value fee’ when items actually sell, which is calculated as a percentage of the total amount of the sale. Thus the higher the sale price, the more profit eBay stands to earn.” Mercado noted that brick-and-mortar stores have been experiecning scarcity for certain products, which has benefitted online retailers during this pandemic.
Mercado accused eBay of permitting price gouging on its platform for its own financial benefit. Mercado is an Uber and Lyft driver, who bought a 2-pack of N95 masks for use while she droves. she paid $23.98 for the pair of masks she bought on eBay. However, the retail price of these masks on Home Depot and other retailers does not exceed $8.99. Thus, she “purchased the masks at a nearly 300% markup.”
California legislation strictly prohibits price gouging during a declared emergency. The anti-price gouging statute states, “[w]hile the pricing of consumer goods and services is generally best left to the marketplace under ordinary conditions, when a declared state of emergency or local emergency results in abnormal disruptions of the market, the public interest requires that excessive and unjustified increases in the prices of essential consumer goods and services be prohibited.” The statue bans price increases greater than 10 percent during a declared emergency, to account for additional costs the seller faces.
In an effort to stop price gouging, eBay banned essential items by “blocking new listings and removing existing ones.” eBay also added a price-gouging reporting tool. However, the plaintiff claims that this ban was “insufficient and ineffective to halt the rampant price gouging that pervades its platform.” Mercado cited its business model as an incentive for eBay to ignore the price gouging on its platform.
Mercado provided examples of this price gouging: a 3-pack of N95 masks being sold for $585, a 10-pack for $415, another for $299, and a 5 pack of Lysol disinfectant spray being sold for $227.50. She stated that these prices are clearly above market value. She added that “eBay’s public touting of a purported ‘ban’ on price gouging is itself likely to mislead consumers, because it creates the false impression that the remaining listings for essential products have been screened for unlawful price-gouging.”
As a result, the plaintiff claimed that eBay’s actions have violated California’s Unfair Competition Law because the law bars “any unlawful, unfair or fraudulent business act or practice” as exemplified by eBay. She said she believes “the increased prices paid for the Protected Products offered and sold on the eBay platform were not directly attributable to additional costs imposed on eBay by the suppliers of the Protected Products,” which is required to justify a maximum of 10 percent price increase, despite eBay selling these items in excess of a 10 percent price increase.
The suit was filed in the Northern District of California. Mercado is represented by AK Law ACPC.
