The Price Is Not Right: Amazon Sellers Gouged Prices By As Much As 1,000% During COVID-19

In the early days of the pandemic, a Tennessee man who hoarded over 17,000 bottles of hand sanitizer to sell at extremely hiked prices on Amazon became the Twitter villain of the week. Amazon pulled his listings and also suspended some other third-party sellers who were price gouging in-demand items as COVID-19 panic set in. The company has maintained throughout the pandemic that it will not tolerate price gouging and will remove those sellers from their marketplace. It even called for a new federal law to ban price gouging, because currently the legality of it — and how much you can hike prices before it’s considered “price gouging” during a disaster — varies by state. Amazon has also said that it’s working with state attorneys general to hold price gougers legally accountable. In a mid-April letter to shareholders, CEO Jeff Bezos said the company had suspended over 6,000 sellers.

A new report by consumer rights group Public Citizen, however, claims that the company hasn’t done enough to stop price gouging. Despite Amazon’s stated intentions, between April and mid-August, the group found evidence of essential products like hand sanitizer and toilet paper being sold through the website at up to 1,000% of what they cost before COVID-19

So what exactly is price gouging? It’s not a term you can apply to any product you think is overpriced, like an expensive eBay painting of questionable quality. It applies to essential goods, usually during a time of crisis. In NYC, for example, it’s illegal for essential items like cleaning products, disinfectants, masks, gloves, medicine, and tissues to be sold at even 10% more than the normal price before the COVID-19 state of emergency was declared.

Public Citizen found that a 12-pack of 8-ounce hand sanitizer recently listed by third-party sellers on Amazon cost $109.98. Other third-party sellers sold this same product for $27.01. A six-pack of 7.5-ounce liquid antibacterial soap was sold by third parties for $50, while the price offered before COVID-19 was around $18. A two-pack of 22-ounce disinfectant spray was listed at $24.89, compared to other sellers who listed it at $5.99. Third-party sellers priced an 18-pack of toilet paper at $100, compared to the lowest recent third-party listing of the same product at $26.24.

Amazon has a Fair Pricing Policy that warns that, although sellers can set prices at their own discretion, the company will remove listings and suspend sellers that are found to violate this policy and “harm customer trust.” Despite that, Public Citizen alleges that it’s not just third-party sellers that are the problem. “What is more troubling,” the report reads, “is that the highest percentage price increases that this report has identified were on products listed as ‘sold by Amazon.’” Examples include a 50-pack of disposable face masks that cost around $4 before COVID-19 and rose by over 1,000% to $39.99, as observed between April 1st and August 16th. A 1,000-sheet 8-pack of toilet paper was sold for as much as $36.39 between May 26th and August 16th, when other retailers have sold this exact item for $6.89, according to the report.

Sometimes, the price difference wasn’t just notable compared to the pre-pandemic era, but to prices observed on the same day at other stores. “On August 16, 2020, Amazon sold a 12-pack of 8oz. 'Germ-X Hand Sanitizer' for $35.38,” the report notes. “The same day, a similar 8oz. Germ-X hand sanitizer bottle was sold for $1.99 on another retail site.”

Food ingredients sold by Amazon saw extreme hikes as well. The price of flour increased by 425% during the period between May 1st and August 16th, rising from $18.88 to $80.35. Corn starch, available at other retailers for as low as $0.89, was sold at $8.99 by Amazon recently — a 1,010% increase. 

In a statement to Refinery29, an Amazon spokesperson reiterated that "there is no place for price gouging on Amazon and that includes products offered directly by Amazon."

The spokesperson then focused on third-party sellers, calling them "bad actors" who are "attempting to take advantage of this global health crisis." Amazon says it has now suspended over 10,000 selling accounts in crackdowns of price gouging. "We have referred the most egregious offenders to federal and state law enforcement across the country to hold them accountable. We continue to actively monitor our store and remove offers that violate our policies," said the spokesperson.

Amazon is far from the only retailer accused of either not doing enough to stop price gouging or participating in it. But according to CNBC, Amazon now accounts for 40% of online sales, far and away the biggest name in the e-commerce market — so it’s clear that the company’s reaction to price gouging has a disproportionate impact on consumers compared to other retailers.

Further, Public Citizen argues that Amazon’s call for federal price-gouging legislation benefits them, because the language in the law it proposes would hold only individual sellers responsible for price gouging, and not Amazon for failing to act quickly in removing them. Still, a federal law does seem necessary, because state-level enforcement is difficult on a digital, nationwide platform like Amazon — a Kentucky court, for example, found that the state’s price gouging laws couldn’t apply to sellers in Kentucky if they were selling on a national marketplace like Amazon.

Public Citizen’s report suggests several steps Amazon could implement to crack down on price gouging in its marketplace, including allowing customers to see the suggested retail price of an item and its price history, setting an upper limit on how much prices can be increased once an item is listed, and showing individual item prices for goods that come in multipacks.