We Need a New Law to Stop Amazon’s Price Gouging

By Alex Harman

October 13 and 14 is Amazon Prime Day, when the company offers discounts to its members, but customers should be wary of the online retailer’s pricing. Only a matter of weeks ago, Amazon got caught price gouging customers on a wide range of essential goods – jacking up prices on face masks, toilet paper, and antibacterial soap by up to 1,000%.

There is no excuse for one of the most profitable corporations in human history – a company that many have come to depend on in the age of social distancing – to take advantage of consumers during a national emergency.

Since the pandemic began, Amazon has blamed so-called “bad actors” for price gouging on its site, but Amazon is neither a victim nor a helpless bystander. It’s a leading perpetrator of pandemic profiteering – and it’s getting away with outrageous price increases at this very moment.

It’s going to take serious reforms by Amazon and a new federal price gouging law to do anything about it. That’s because in June, a federal court in Kentucky struck down the state’s price gouging law and imperiled similar laws all across the country – setting back our ability to hold price gougers accountable and stop them from exploiting consumers.

Here’s what happened:

This spring, Amazon faced its first round of pandemic price gouging allegations and a wave of bad publicity. Attempting to repair its reputation, Amazon partnered with Kentucky Attorney General Daniel Cameron to identify local sellers who were raising prices on essential emergency and medical supplies. Cameron’s office issued cease and desist orders to more than half the sellers and subpoenaed six of them.

In response, the Online Merchants Guild, a corporate trade association that lobbies and litigates for eCommerce vendors, filed a lawsuit against Cameron in federal court. The Guild took the outlandish position that Kentucky’s price-control statutes are unconstitutional when applied to Kentucky merchants who sell on a national marketplace like Amazon.

Unfortunately, they won.

In June, the court ruled that state-level price gouging laws are unconstitutional because they attempt to regulate prices outside of the state. This ruling, if affirmed by a higher court, could strike down virtually every state-level price gouging law in the country – and block states that don’t yet have such laws from establishing them.

With this latest legal development, the country urgently needs a federal price gouging law.

Amazon claims to support one, but only if it includes language that would immunize Amazon from liability for price gouging by third parties that sell on its platform.

That’s not good enough.

We need a law that applies anywhere price gouging occurs in the supply chain; provides a clear and unambiguous definition of it; includes a broad list of products, goods and services; has tough civil penalties; and is applicable to the pandemic and future emergencies.

Furthermore, Amazon needs to completely overhaul its product and price listings. Among other things, that means capping price increases on all products and publishing a suggested retail price, an average price and a link to a price history for every item.

It means ending the creation of new product pages for previously listed products, which prevents anyone from tracking a product’s price history. It means listing multi-pack and individual prices together and requiring that multi-packs offer a quantity discount. And it means customers need a button for reporting a product listing or pricing problem.

None of these reforms should be even mildly difficult for a trillion-dollar company that doubled its net profits during the pandemic, and whose CEO’s wealth increased from $113 billion in March to $206 billion today.

But don’t hold your breath waiting for them to act. Amazon’s response to the latest proof of their price gouging was flat-out denial.

Now is the time for every Amazon customer to be outraged, demand better from the company and call on their congressional lawmakers to commit to drafting a tough price gouging law. Until then, Amazon will continue jacking up prices on essential goods with impunity.

###

Harman is the competition policy advocate for Public Citizen and author of the report on Amazon’s price gouging.