AGs Crackdown on COVID-19 Related Price Gouging

Attorneys General across the United States are cracking down on individuals and businesses that are selling hand-sanitizer, face masks, disinfectants, and other products at a substantial mark-up, taking advantage of product shortages related to COVID-19.

Over the weekend, a New York Times article, which was widely circulated across social media platforms, reported that two Tennessee men, Matt and Noah Colvin, had bought over 17,000 bottles of hand-sanitizer in the past several weeks and were selling them on Amazon for multiples higher than what they had paid for them. Consumers, who were unable to find hand-sanitizer online or at local retailers, paid between $8 and $70 a bottle for hand-sanitizer that the Colvins had posted on Amazon.

Many states have statutes expressly prohibiting price gouging in the wake of an emergency declaration. For example, California prohibits selling food, medical supplies, fuel, and other essentials after a declared state of emergency for more than 10 percent of the price of these items prior to the emergency declaration. In states that do not have similar statutes, Attorneys General can apply broader consumer protection statutes prohibiting unfair and deceptive trade practices to prohibit price gouging.

Several Attorneys General have swiftly taken action to prevent price gouging in wake of the COVID-19 crisis. New York Attorney General Letitia James has sent cease-and-desist letters to dozens of retailers accused of price gouging in recent days. Michigan Attorney General Dana Nessel announced that she had received 75 price-gouging complaints and issued letters to several retailers demanding specific information in order to avoid a formal action or investigation. Florida Attorney General Ashley Moody has activated a price gouging hotline, and several states have created price gouging online complaint forms.

In response to the Times article, Tennessee Attorney General Herbert Slattery III sent the Colvins a cease-and-deists letter and initiated an investigation (Amazon also pulled their items and suspended their account). The Tennessee price gouging statute prohibits charging prices “grossly in excess of the price generally charged” for many essential products after a proclamation of a state of emergency. The Colvins may be subject to fines once the investigation is concluded.

Our team at Foley Hoag is continuing to monitor how state Attorneys General are responding to the COVID-19 crisis. Foley Hoag has also established a multi-disciplinary task force to help address legal matters related to COVID-19 and provide clients with the resources required to develop and implement legal and operational policies and procedures, as well as business strategies during the outbreak and beyond.

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