Amazon Says It Was Not Price Gouging During the Pandemic When It Sold Toilet Paper for $36
Amazon and its third-party sellers saddled customers with astronomical price increases on essential products such as toilet paper, face masks, and hand sanitizer after the start of the COVID-19 pandemic earlier this year, according to a report published Thursday by consumer advocacy nonprofit Public Citizen.
The group found that the price of some products deemed essential" by existing or proposed state price-gouging statutes had increased by many times their initial price on Amazon.com. A package of 50 disposable face masks produced by LeadPro, for example, were sold on Amazon.com for $39.99, up from around $4 before the pandemic. The site has also recently sold 8-roll packages of Scott toilet paper for as much as $36.39, when other retailers were charging less than $7.
There are currently 36 states, plus D.C., that have price-gouging statutes on the books, according to the National Conference of State Legislatures. The statutes vary, however, with some states like Arkansas, California, and Delaware limiting price increases by 10%, and others, like Kansas, that set the threshold as high as 25%.
Additionally, the report found that the prices of 10 essential products including hand sanitizer, soap, toilet paper, flour, and rice sold by third-party sellers on Amazon.com exploded when compared to their pre-pandemic costs. The cost of a 10-pound bag of flour, for example, went from $6.27 to $59.99, an increase of 941%.
The company said it uses technology to detect price gouging.
As we have said, there is no place for price gouging on Amazon and that includes products offered directly by Amazon," an Amazon spokesperson told VICE News following the publication of this story.
Our systems are designed to meet or beat the best available price amongst our competitors and if we see an error, we work quickly to fix it. Our teams continue to monitor our store 24/7 and have already removed over a million offers."
Public Citizen said the report demonstrates the need for stronger regulation from both the government and Amazon itself.
Amazon has fundamentally misled the public, law enforcement, and policymakers about price increases during the pandemic," author and competition policy advocate Alex Harman said in a statement accompanying the release of the report. Amazon has publicly blamed third-party sellers for price increases while continuing to raise prices on its own products and allowing those sellers to increase their prices."
In May, the company announced its support for a federal price-gouging law, saying it has zero tolerance for price gouging and longstanding policies and systems in place to combat it," and that it has suspended more than 4,000 accounts - deemed bad actors -for inflating prices. That statement said, however, that pricing prohibitions should apply to the party who actually sets the price of a product" - meaning it would be immune from liability in the case of third-party sellers.
Last month, the German government launched an investigation into Amazon for allegedly illegally regulating sellers on its platform. It's not up to a private platform to be a price regulator or the price police," a spokesperson for the German Federal Cartel Office told CNBC.
Amazon has made an extraordinary amount of money during the pandemic. The company doubled its Q2 profit from $2.6 billion in 2019 to $5.2 billion in 2020. The company ended its hazard pay for workers in June.
And even as tens of millions of Americans filed for unemployment, CEO Jeff Bezos saw his personal wealth increase by $48 billion between March and June alone, according to Business Insider. Bezos has made so much, in fact, that he could give all 876,000 Amazon employees a onetime $105,000 bonus and still come away with as much money as he had before the pandemic, a forthcoming report from Oxfam found.