Price Gouging May Begin to Cost Retailers

By Joseph Fawbush, Esq. on April 24, 2020 | Last updated on August 10, 2021

The lawsuits and enforcement actions against alleged price gougers is heating up. State attorneys general have been handling numerous complaints and have indicated a willingness to prosecute offenders. Florida businesses have returned hundreds of thousands of dollars to consumers after complaints about price gouging were filed with the state. Meanwhile, consumers in California and elsewhere are beginning to file class actions against retailers, alleging they are profiting from the pandemic.

There is no federal law that prohibits price gouging. However, in most states, price gouging is illegal, or is considered an unfair or deceptive trade practice. Retailers accused of price gouging can face fines and other penalties. Many states have set up hotlines to receive consumer complaints.

So far, at least, states have largely focused on established retailers when investigating potential price gouging. However, that may be changing. For example, Ohio Attorney General Dave Yost recently filed a price gouging lawsuit against online seller “Donkey476" for selling N95 masks at exorbitant prices. A California man was recently arrested for similar behavior.

There is also some movement at the federal level to prohibit hoarding and price gouging. President Trump issued an Executive Order to enforce the anti-hoarding provisions of the Defense Production Act. Federal authorities could also conceivably use existing laws such as fraud and anti-trust laws to prosecute egregious instances. A bill has also been introduced in the House to ban price-gouging items related to COVID-19.

Lawsuits Alleging Price Gouging Increasing

It is not just state authorities on the lookout for retailers taking advantage of unprecedented circumstances. According to a federal lawsuit filed in San Francisco, Amazon, Walmart, and Costco, among others, have “taken advantage of the misery of millions" to profit from selling eggs at an inflated price. Eggs in California have tripled in price since the pandemic.

Amazon is also facing a separate lawsuit over the price of “essential items."

More Enforcement and Lawsuits Sure to Come

Retailers will need to be careful to comply with state price gouging laws and monitor for any federal action. Meanwhile, attorneys who practice criminal defense or consumer protection may find a new demand for their services.

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