Coronavirus: Do more to stop price gouging, US states tell Amazon, Walmart, Facebook

A person walks through Chinatown on March 24, 2020 in New York City.
A person walks through Chinatown on March 24, 2020 in New York City.PHOTO: AFP

WASHINGTON (REUTERS) - A group of 32 US states have a message for the nation's leading online platforms: You are not doing enough to stop price gouging amid the coronavirus crisis.

In a letter sent on Wednesday (March 25) to, Walmart, Facebook and eBay, a bipartisan group of US attorneys-general outlined specific steps it wants the online platforms to take to end this practice.

Pennsylvania's Josh Shapiro is leading the effort along with attorneys-general from the states of Connecticut, Vermont and New Mexico.

The steps include triggering price-gouging protections prior to emergency declarations in a state, being proactive in setting policies and restrictions on sellers instead of playing catch up and creating a "fair pricing" page where consumers can report incidents.

"They should use their data and analytics tools to stop price spikes, not play whack-a-mole when they find something on their platform... We are seeing them handle this on a case-by-case basis, which is really not practical," Shapiro told Reuters in an interview.

EBay said it is taking significant measures to block or remove items that make false health claims and is making efforts to ensure sellers on its platform follow local laws and company policies.

A Facebook spokesman said the company has removed ads and commercial listings for items like masks and hand sanitisers.

"While enforcement is not perfect, we have put several automated detection mechanisms in place to block or remove this material from our platform," the spokesman said.

Walmart said it has implemented a "price freeze" on critical items and that merchandising teams cannot change prices for items sold in stores. Similarly, it is monitoring prices online to make sure they remain reasonable.

Amazon did not respond to requests for comment.

Shapiro said his office has received approximately 2,900 tips of price gouging on online platforms and brick-and-mortar stores in the past eight to nine days and issued 90 cease-and-desist orders to sellers engaged in the activity.


He said if these orders fail to deter merchants, his office can fine them up to US$10,000 (S$14,000) per violation.

The issue of price-gouging on online platforms has become a hot topic among law enforcement agencies, officials and lawmakers as panicked consumers look to stock up on essential items during the outbreak.

It also reflects the intense pressure online platforms are under to protect consumers while delivering goods during a pandemic.

Earlier this week, Amazon said it had removed 3,900 seller accounts involved in this activity. In early March, the company said it is working with state attorneys general to identify and prosecute third-party sellers.

A report by the US Public Interest Research Group released March 11, found nearly one in six of the products sold directly by Amazon had prices spike 50 per cent higher than the 90-day average.

"Even new protections by your company including heightened monitoring, bans on certain advertisements, and bans on selling certain items, have failed to remove unconscionably priced critical supplies," the letter said.