Miller warns online marketplaces, other sellers over price gouging

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(from the Iowa Attorney General’s Office)
DES MOINES ― Attorney General Tom Miller joined letters with 32 other attorneys general to urge Amazon, Facebook, Ebay, Walmart, and Craigslist to more rigorously monitor price-gouging practices by online sellers using their services.

The action is among several that Miller is taking to address price gouging during the COVID-19 pandemic. Since Gov. Kim Reynolds declared a disaster emergency, the Attorney General’s Office has received 50 formal and approximately 200 informal complaints about excessive pricing at retail stores, online sites and social media platforms. The most frequent complaints involved medical masks and respirators, toilet paper or other paper products, hand sanitizer and cleaning products.

“It is illegal and unconscionable for sellers to raise prices excessively during this pandemic,” Miller said. “We will pursue anyone who persists in this practice, and that includes individual sellers on social media as well as retailers.”

Businesses or individuals found in violation could face civil penalties of up to $40,000 under the Iowa Consumer Fraud Act.

A disaster declaration triggers the state’s price-gouging rule, which forbids excessive prices for goods or services “needed by victims of disasters.” That includes water, food, medicines, sanitation supplies, utilities, and building materials. An excessive price is one “not justified by the seller’s actual costs of acquiring, producing, selling, transporting, and delivering the actual product sold, plus a reasonable profit.”

For complaints that have potential merit, investigators in the Attorney General’s Office are contacting sellers and asking for more information. Office personnel are also posting warnings on social media postings that appear to be in violation, and in some cases are contacting individual online sellers. The office will issue cease and desist letters to anyone who is clearly price-gouging and consider further legal action to those that refuse to comply.

“Most sellers are cooperating after we point out the rule,” Miller said. “We won’t hesitate to take further action to protect Iowans, however.”

Miller encourages Iowans to collect evidence when they see potential price-gouging, such as taking a photo of the item showing brand, amount, price and other details.

The letters from the attorneys general list several examples of price-gouging on online marketplace platforms, all of which took place only in March: on Craigslist, a two-liter bottle of hand sanitizer was being sold for $250; on Facebook Marketplace, an eight-ounce bottle was being sold for $40; and on Ebay, packs of face masks were being sold for $40 and $50.

“We want the business community and American consumers to know that we endeavor to balance the twin imperatives of commerce and consumer protection in the marketplace,” the attorneys general wrote in their letters. “And, while we appreciate reports of the efforts made by platforms and online retailers to crack down on price gouging as the American community faces an unprecedented public health crisis, we are calling on you to do more at a time that requires national unity.”

The attorneys general recommend several changes to protect consumers from price gouging:

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 before an emergency declaration, such as when your systems detect conditions like pending weather events or future possible health risks.
Implement a complaint portal for consumers to report potential price gouging.
In addition to Miller, this letter was signed by attorneys general from California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Idaho, Illinois, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Rhode Island, Utah, Vermont, Virginia, Washington, Wyoming, and Puerto Rico.

During the COVID-19 pandemic, Miller also reminds Iowans to:

Watch out for scams related to the pandemic, including phishing scams and robocalls, bogus treatments, fake or unapproved test kits and charity fraud. Consumers can find more information on scams at ftc.gov/coronavirus. Do not open any emails from persons or entities you do not know, even if it appears from a legitimate source such as the Centers for Disease Control and Prevention, the Iowa Department of Public Health, or other governmental entities.

Be aware of your rights during this emergency. Gov. Reynolds has issued declarations that assist consumers, including halting foreclosures and most evictions.

To seek help

Consumers should contact the Consumer Protection Division if they have consumer complaints about price gouging:

Web: www.iowaattorneygeneral.gov

Phone: 515-281-5926 (toll-free number outside of the Des Moines area: 888-777-4590)

Email: consumer@ag.iowa.gov

For up-to-date information on COVID-19, see the CDC and the Iowa Department of Public Health websites.