Face mask pricing reaches an unlawful fever pitch as coronavirus fear takes the public by storm
Last week, Reuters reported that profiteers were listing face masks for sale on Amazon at inflated prices amid rising concern over the spread of the coronavirus disease (Covid-19). Opportunistic retailers started to charge prices four to five times higher than the price for the same product weeks before the hysteria spread, according to WIRED’s story earlier that week.
That was until Amazon decided to remove or block tens of thousands of items on its marketplace for violating its internal rules that prohibit price gouging. Amazon’s Fair Pricing Policy forbids third-party sellers from creating a price mark for a product that is significantly higher than ones recently set for the same product. Its decision to remove or ban face masks priced significantly higher than in prior weeks, in addition to hand sanitizers and nonperishable foods falling in that same category, sent a message to sellers that the company intends to enforce its pricing policy to protect consumers and other third-party sellers.
But the magnitude of Amazon’s expansive marketplace portends a difficult task ahead for the company as news of the disease’s impact continues to make national headlines. That’s where state and federal regulators must step in to ensure the broader free market does not expose consumers to exorbitant pricing that plays on their fear for safety; and, many states already have laws in place to empower the attorneys general of each to enjoin such acts and to punish those in the wrong.
North Carolina is one of those states. N.C. Gen. Stat. § 75-38 prohibits excessive pricing during states of disaster, states of emergency, or abnormal market disruptions. The statute reads in full as follows.
(a) Upon a triggering event, it is prohibited and shall be a violation of G.S. 75-1.1 for any person to sell or rent or offer to sell or rent any goods or services which are consumed or used as a direct result of an emergency or which are consumed or used to preserve, protect, or sustain life, health, safety, or economic well-being of persons or their property with the knowledge and intent to charge a price that is unreasonably excessive under the circumstances. This prohibition shall apply to all parties in the chain of distribution, including, but not limited to, a manufacturer, supplier, wholesaler, distributor, or retail seller of goods or services. This prohibition shall apply in the area where the state of disaster or emergency has been declared or the abnormal market disruption has been found.
In determining whether a price is unreasonably excessive, it shall be considered whether:
(1) The price charged by the seller is attributable to additional costs imposed by the seller's supplier or other costs of providing the good or service during the triggering event.
(2) The price charged by the seller exceeds the seller's average price in the preceding 60 days before the triggering event. If the seller did not sell or rent or offer to sell or rent the goods or service in question prior to the time of the triggering event, the price at which the goods or service was generally available in the trade area shall be used as a factor in determining if the seller is charging an unreasonably excessive price.
(3) The price charged by the seller is attributable to fluctuations in applicable commodity markets; fluctuations in applicable regional, national, or international market trends; or to reasonable expenses and charges for attendant business risk incurred in procuring or selling the goods or services.
(b) In the event the Attorney General investigates a complaint for a violation of this section and determines that the seller has not violated the provisions of this section and if the seller so requests, the Attorney General shall promptly issue a signed statement indicating that the Attorney General has not found a violation of this section.
(c) For the purposes of this section, the end of a triggering event is the earlier of 45 days after the triggering event occurs or the expiration or termination of the triggering event unless the prohibition is specifically extended by the Governor.
(d) A "triggering event" means the declaration of a state of emergency pursuant to Article 1A of Chapter 166A of the General Statutes or a finding of abnormal market disruption pursuant to G.S. 75-38(e).
(e) An "abnormal market disruption" means a significant disruption, whether actual or imminent, to the production, distribution, or sale of goods and services in North Carolina, which are consumed or used as a direct result of an emergency or used to preserve, protect, or sustain life, health, safety, or economic well-being of a person or his or her property. A significant disruption may result from a natural disaster, weather, acts of nature, strike, power or energy failures or shortages, civil disorder, war, terrorist attack, national or local emergency, or other extraordinary adverse circumstances. A significant market disruption can be found only if a declaration of a state of emergency, state of disaster, or similar declaration is made by the President of the United States or an issuance of Code Red/Severe Risk of Attack in the Homeland Security Advisory System is made by the Department of Homeland Security, whether or not such declaration or issuance applies to North Carolina.
(f) The existence of an abnormal market disruption shall be found and declared by the Governor pursuant to the definition in subsection (e) of this section. The duration of an abnormal market disruption shall be 45 days from the triggering event, but may be renewed by the Governor if the Governor finds and declares the disruption continues to affect the economic well-being of North Carolinians beyond the initial 45-day period.
Usually, the Attorney General invokes this law in North Carolina for weather-related emergencies, like a hurricane. But the risk of the coronavirus can become a triggering event under the law, and consumers should watch for sellers who attempt to charge substantially higher prices for goods or services consumed or used as a direct result of the panic associated with the spread of the coronavirus, such as face masks, hand sanitizers, and nonperishable foods.
Please use the Attorney General’s online form to report any such seller who might be in violation of North Carolina’s price gouging law. This will help protect consumers throughout the state and law-abiding businesses from unfair competition.