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05/13/2020

Amazon top exec calls for federal price gouging law

Marianne Wilson
Editor-in-Chief
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Amazon wants Congress to establish a federal price-gouging law, saying that the legislation is needed to protect consumers.

In a blog post, Brian Huseman, Amazon’s VP for public policy, noted that while there are price gouging laws in some states, the laws don’t go far enough in protecting consumers against unfair pricing during crises such as the COVID-19 pandemic.

“The disparate standards among states present a significant challenge for retailers working to assist law enforcement, protect consumers, and comply with the law,” he stated.

There has been a big surge in price gouging amid the COVID-19 pandemic, with some third-party sellers overcharging for such in-demand items as masks and hand sanitizers on Amazon and other online sites. Huseman called the surge unsurprising. 

“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,” he said.

Amazon, Walmart and other online retailers have worked to contain the sellers. But some, particularly Amazon, have come under heavy criticism, for their failure to effectively curb the price gouging. Huseman, however, said that Amazon has “zero tolerance for price gouging and longstanding policies and systems in place to combat it.” 

Amazon has removed well over half a million offers from its online stores due to coronavirus-based price gouging, according to Huseman, and has also suspended nearly 4,000 selling accounts in its U.S. store alone for violating the company’s fair-pricing policies.

“We deploy dynamic automated technology to proactively seek out and pull down unreasonably priced offers, and we have a dedicated team focused on identifying and investigating unfairly priced products that are now in high demand, such as protective masks and hand sanitize,” Huseman stated.  

The Amazon executive detailed a framework for a federal price gouging law, which should kick in when the federal government declares a public health crisis or emergency. It should also establish clear pricing standards, define who and what are covered by the law, and ensure strong enforcement authority.

Other details include giving the Federal Trade Commission the power to go after price gouging, allowing for “more expeditious enforcement.” Huseman said the standards should also take into account any unavoidable rises in supply, transportation and labor costs that businesses face during an emergency.

“Put simply, we want to avoid the $400 bottle of Purell for sale right after an emergency goes into effect, while not punishing unavoidable price increases that emergencies can cause, especially as supply chains are disrupted,” he explained. “Furthermore, any prohibitions should apply to all levels of the supply chain so that retailers and resellers are not forced to bear price gouging increases by manufacturers and suppliers.”

To read Huseman’s full blog, click here.