Amazon accused of price gouging throughout the pandemic

onetheycallEric

Posts: 209   +31
Staff member
A hot potato: Despite Amazon's public stance on price gouging, a new report highlights several key findings that seem to contradict the e-commerce giant's claims. The report finds that the company has not only engaged in price gouging on items sold directly by Amazon, but has also facilitated inflated prices for third-party sellers, all while misleading the public and law enforcement. The report highlights the need for price gouging laws at the federal level, and also calls for Amazon to reform its own pricing practices.

According to a damning report by Public Citizen, Amazon is being accused of excessive price gouging during the global pandemic. As more people pivoted to online shopping amidst stay-at-home mandates, Amazon's revenue soared -- but apparently so did some of its prices.

Reports of rising prices on Amazon surfaced early on and Amazon claimed it was working with the relevant authorities to curb a wave of rising prices, removing millions of items over false coronavirus claims, and even blamed a certain amount of unsavory third-party sellers on the site.

“There is no place for price gouging on Amazon."

Amazon even went on a hiring spree to help meet insatiable demand, while claiming it was continuing to combat price gouging on the platform. Amazon also went as far as to call for federal legislation regarding price gouging laws. However, in its report, Public Citizen has produced evidence that Amazon's actions may not have been as altruistic as the company has let on, despite having stated that "there is no place for price gouging on Amazon."

The "Prime Gouging" report details 15 essential products that have been sold on Amazon -- either directly by Amazon or through third-party sellers -- between the months of February and August. The report finds that these products have seen markups ranging from 76 percent to more than 1,000 percent.

For example, disposable face masks have seen a surge in price by as much as 1,000 percent. Per the report, a 50-pack of disposable masks was generally available for around $4 before the onset of the pandemic. Over the last several months, a similar package of 50 disposable masks has been sold for as much as $40, directly by Amazon.

Another notable offense seems to be corn starch, which typically carries an average price of $0.89 for a 6.5 ounce container of Clabber Girl Corn Starch, but has been sold for as much as $9. At the time of writing, this item is currently seeing prices between $5.69 and $11.00, with varying shipping charges.

Third-party sellers account for a significant portion of Amazon's revenue, as Amazon retains a percentage of the sales. It's a synergistic relationship, when Amazon's sellers are earning more revenue, so is Amazon.

It seems some of the more excessive prices on items available through third-party sellers has been flour, rice, and paper towels, with price increases of 941 percent, 641 percent, and 450 percent, respectively.

In response to its findings, Public Citizen notes that Amazon's price gouging is in violation of many state laws that prohibit price increases of more than 10 percent. In concluding its report, Public Citizen is now calling for a unilateral federal law to prohibit price gouging, as online shopping platforms are often able to dodge state laws.

"The absence of a federal law, combined with online shopping that transcends state borders, has created gaps in protection from price gouging, and has led to the potential for state price gouging laws to be ineffective at addressing online price gouging," says the report.

Specifically, Public Citizen proposes the following for a new federal law:

  • Provide a clear and unambiguous definition of price gouging such as a 10 percent increase in prices during an emergency;
  • Include a very broad list of products, goods, and services that would be covered;
  • Establish significant civil penalties enforceable by the Federal Trade Commission and state attorneys general;
  • Apply wherever price gouging occurs in the supply chain; and
  • Be applicable during the current COVID-19 pandemic as well as any disaster or health emergency now and in the future.

Additionally, Public Citizen's report is calling for Amazon to reform its pricing and product listing practices, which tend to be nebulous at best, and flat out misleading at worst. To that end, it's recommended that Amazon not only publishes a comprehensive price history of items, but also an average price as well as the suggested MSRP.

Other recommendations include instituting a limit on how much an item can raise in price, ending the practice of creating new pages for items already listed (which makes it hard to assess pricing history), as well as providing a simple and transparent way for consumers to report problems with a product listing.

In a statement, an Amazon spokesperson noted that Public Citizen's report helped to identify a number of pricing errors, and reiterated that Amazon has removed over a million listings for suspected price gouging, while also having suspended some 10,000 selling accounts.

Image credit: Russ Vance

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Goat11

Posts: 8   +26
Good old Jeff - never turns down an opportunity to shaft the public for a fast buck.

Still at least we will get some of his filthy money back in tax - oh no wait Jeff doesn't do tax does he?
I am NOT defending Jeff here, just like you, I am not a big fan of ultra rich (read greedy) people, but to be fair, NONE of the ultra rich people pay taxes, if they do, it's probably less than what you and I pay. It's not their fault for their greedy human nature. If you wish to blame someone, point your finger at the political body who let them PAY NO TAXES in return to put money in politicians pockets and call it lobbying
 

ColdSoup

Posts: 77   +165
Why is it newsworthy that Amazon raises prices on hard to find items when literally every brick and mortar store has done the same thing?
 

Plutoisaplanet

Posts: 269   +299
I am NOT defending Jeff here, just like you, I am not a big fan of ultra rich (read greedy) people, but to be fair, NONE of the ultra rich people pay taxes, if they do, it's probably less than what you and I pay. It's not their fault for their greedy human nature. If you wish to blame someone, point your finger at the political body who let them PAY NO TAXES in return to put money in politicians pockets and call it lobbying
For any investor that sells over a certain amount of shares of a company long term, there’s a capital gains tax of 20% at the federal level and typically 5% or more at the state level depending on where you are a resident of. This only applies to once shares are sold, not “unrealized” gains where you don’t have the cash and the value isn’t a fixed amount (ie. it can go to a billion, then to 0).

Owning a part of a company (shares) is how a majority of these billionaires make all their wealth. Realistically, $45B of Jeff Bezos’ current $180B of shares would go to the government as taxes if he sold them for cash today.
 

OortCloud

Posts: 415   +263
I am NOT defending Jeff here, just like you, I am not a big fan of ultra rich (read greedy) people, but to be fair, NONE of the ultra rich people pay taxes, if they do, it's probably less than what you and I pay. It's not their fault for their greedy human nature. If you wish to blame someone, point your finger at the political body who let them PAY NO TAXES in return to put money in politicians pockets and call it lobbying
Just because a whole lot of them are at it doesn't make it any better and Amazon are particularly bad (along with Apple). If you want somebody else to blame in this, then blame countries like Ireland who allow companies to exploit these loopholes.
 

Lounds

Posts: 539   +390
To be fair this is just common business practices, if demand is high and products are scarce, then prices go up, it's like an aircon regas in summer is usually more expensive than doing it in winter.
 
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Draconian

Posts: 106   +30
$25 for a $6 bottle of disinfectant spray sounds accurate.

$5 canisters of disinfecting wipes are going for $25 on eBay.

Also, it's great that people have discovered the importance of hand washing, but now it's hard to find hand soap for an affordable price online.
 

mailpup

Posts: 7,593   +716
TS Special Forces
The one thing on those lists that I have bought from Amazon periodically are nitrile gloves for mainly when I work on auto repair jobs. For that I did notice a tripling of prices. Fortunately, I found a supplier that has not increased their prices but unfortunately they've been out of stock for awhile which is understandable given their pricing.
 

SNGX1275

Posts: 10,580   +445
The prices for disinfecting wipes still is insane everywhere. I've got about 1/4 of one left that I bought in a multi-pack at Big Lots a couple years ago (I use them mostly for bathroom cleaning - they work really well for sinks). I doubt I paid more than $7 for a 2 pack. Now either places don't have them, or they are insane prices like those listed in the article. Its been months now, hand sanitizer is now everywhere, wtf is going on with the factories that dump some liquid on slightly stronger paper towels?
 

Endymio

Posts: 346   +229
Realistically, $45B of Jeff Bezos’ current $180B of shares would go to the government as taxes if he sold them for cash today.
No, because Bezos couldn't realize anywhere near $180B for those shares. What people fail to understand is that wealth on paper is a rather meaningless statistic. The moment Bezos -- or anyone -- began to sell a block of shares that large, the price would drop like a stone.
 
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p51d007

Posts: 2,487   +1,759
Everyone talking about "the rich not paying their fair share", there is an EASY way around that.

https://fairtax.org/

And before you laugh it off, READ it. It's a tax on consumption, not income, with those making the least, getting the most back in prebates. "The rich" will pay a higher percentage on the crap they buy.
 
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PenguinJoe

Posts: 11   +7
TechSpot Elite
The thing with Amazon is you have to be an educated consumer. As with buying anything do your homework. If you see something, compare its prices with other retailers. You might find that Amazon is WAY overpriced for some things, but a really good deal on others.

As consumers it is US that sets the price not big corporations like Amazon. If we are not stupid enough to pay outrageous prices, those prices will come down. If we are stupid, those prices stay high and go higher.