Amazon Requests Price Gouging Legislation from Congress

Amazon has asked lawmakers to enact price gouging legislation to protect consumers from bad actors taking advantage of the COVID-19 pandemic. Amazon pointed to the “nationwide surge in complaints about price gouging.” Amazon asserted that it is Congress’s responsibility to protect consumers from this misconduct. The online retail giant has faced Congressional pressure and lawsuits over price gouging on its platform since the COVID-19 pandemic took hold.

“Whenever the demand for basic necessities increases, there are bad actors who try to exploit circumstances by marking up goods in a way that goes far beyond the laws of supply and demand. Amazon has zero tolerance for price gouging and longstanding policies and systems in place to combat it.” Amazon said it investigates and removes these items from its platform; the company has already removed more than 500,000 offerings because of price-gouging related to the pandemic and that around 4,000 merchant accounts in the United States have been suspended for violating its price-gouging policies.

Amazon also said it has shared egregious price gouging information with federal prosecutors and state attorneys. Amazon notes that it has created a special mechanism for state attorney generals to “quickly and easily escalate the consumer complaints they have received.” The company specifically shared information on a price-gouging operation in Tennessee, which was hoarding at least 17,000 bottles of hand sanitizer that were mostly purchased at dollar stores. They attempted to sell the in demand item for $70 per bottle. The vendor has since donated its supply.

Currently, only around two-thirds of states prohibit price gouging during a crisis. “The disparate standards among states present a significant challenge for retailers working to assist law enforcement, protect consumers, and comply with the law. For example, some states define price gouging as a price ranging from 10% to 25% above average sales prices; others simply prohibit “unconscionably excessive” price increases; some have no explicit laws against price gouging, but seek to enforce price gouging under general consumer protection statutes; and many, but not all, states permit price increases that reflect increased costs of goods and supply chain costs.” Amazon said because each state is different and has different standards of price gouging, “a federal price gouging law would ensure that there are no gaps in protection for consumers.” Amazon wants this legislation to give the FTC the authority to go after scammers and bad actors; it should also help state attorney generals with this process.

Amazon has proposed several elements for the legislation, including that it is triggered whenever the federal government declares a public health crisis or national emergency. Other proposed details include clear pricing standards and enforcement authority; the law should define pricing prohibitions as “unconscionable or grossly excessive or unconscionably excessive”; and should also account for the fact that business costs can increase during a crisis, which can account for a modest price increase. The company added that prohibitions should apply to all supply chain levels.