Amazon.com has taken advantage of vulnerable consumers during the COVID-19 pandemic by marking up certain high-demand products far in excess of what’s allowed under California law, a proposed class action claims.
As many consumers experience scarcity, financial hardship and restricted travel due to the coronavirus crisis, Amazon has “unconscionably” gouged prices for everything from face masks, pain relievers and cold medicines to flour and disinfectants as locked-down citizens become increasingly reliant on online retailers, the 49-page lawsuit claims.
Moreover, Amazon has engaged in this conduct despite publicly vocalizing its efforts to prevent third-party suppliers from similarly gouging prices, the case alleges.
“Like every seller, Amazon has an obligation under California law to ensure that its pricing does not exploit consumers facing emergency conditions,” the lawsuit reads. “Amazon has not abided by that obligation. In fact, as the COVID-19 crisis has escalated, so too have Amazon’s prices for the goods consumers require to remain healthy, protected, and nourished.”
Alleged triple-digit price gouging
California Governor Gavin Newsom’s declaration of a state of emergency on March 4 triggered certain consumer protections that legally bar retailers from excessively increasing prices, the case explains. According to the lawsuit filed in the Northern District of California, a state of emergency prohibits profiteering during a crisis by banning any price increase that exceeds 10 percent.
Despite the hard cap on price increases during a state of emergency, Amazon, however, has seen its sales “up more than 1,000 percent” during the pandemic, due to what the lawsuit claims is both an unprecedented surge in online shopping and “rampant” price gouging for essential goods sold by both the defendant and third-party retailers operating on Amazon.com.
Amazon’s “flagrant” price gouging has resulted in triple-digit price increases for certain products, the case says. By way of example, prices for products such as face masks, pain relievers and cold remedies have jumped 500, 233 and 674 percent, respectively, according to the suit, while food necessities like black beans and flour have skyrocketed 672 percent and 400 percent, respectively. The price of dried pitted prunes increased nearly 160 percent during the pandemic, while rice jumped 119 percent and a four-pack of toilet paper was at one point seen for sale on Amazon for $72, the lawsuit relays.
Though California law states that prices can increase no more than 10 percent during a state of local emergency, many of Amazon’s price hikes, affecting both its own inventory of products and goods sold by third parties, have blown past the 600 percent threshold, the lawsuit alleges. Further, the suit, citing a Public Interest Research Group study, says Amazon in February 2020 increased prices forone-sixth of the public health essentials used to combat COVID-19 “by more than 50 percent.”
According to the case, Amazon is predicted to announce first-quarter 2020 revenues of $73 billion, up 22 percent from last year.
“This means Amazon has generated $10,000 every second of every day in 2020,” the complaint says.
Using one plaintiff’s alleged experience as an example, the case says a hair remover kit was listed on Amazon at $4.75 before a state of emergency was declared in California. On March 17, days after the declaration, the price spiked to $8.42, the lawsuit says. When the plaintiff bought her hair remover kit, she paid $6.74, which is 42 percent more than the product’s price before Governor Newsom’s declaration of a state of emergency.
The other plaintiff, the suit says, bought a facial cleanser from Amazon for $14.47, 51 percent more than its pre-state of emergency price of $9.60. Days after Governor Newsom’s announcement, the product’s price on Amazon spiked to $23.97, according to the complaint.
Who’s covered by the lawsuit?
The suit looks to certify a class of consumers in California who bought any “protected product” on Amazon.com on or after February 4, 2020 at a price 10 percent greater than that charged on Amazon.com for the same protected product (a) on February 2, 2020 or (b) immediately prior to any declaration of a state of emergency relating to the COVID-19 crisis.
What if I don’t live in California?
Unfortunately, this lawsuit deals specifically with California state law. During the pandemic, however, ClassAction.org has seen firsthand a swell in lawsuits looking to represent consumers who were allegedly harmed by the conduct of companies during the coronavirus outbreak. We don’t anticipate this spike to drop off anytime soon, and that means it’s entirely possible that other cases looking to represent consumers in other states or nationwide who may have been harmed by Amazon’s alleged price gouging will be filed.