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Nessel's Consumer Protection Team on High-Alert for Online Price-gouging
April 29, 2020
LANSING – In an effort to protect consumers from price-gouging in the digital world, Michigan Attorney General Dana Nessel announced today that her office has sent cease and desist letters to three online sellers for price-gouging and finalized an agreement with a fourth seller who forfeited profits and agreed not to engage in the unlawful business practice any longer.
The Attorney General’s office on Tuesday sent cease and desist letters to three Michigan-based, online storefronts conducting business through Amazon under the usernames: CollectiblesJi, SmartHome Distribution, and Warehouse Bricks. The sellers are based in Berrien Springs, Portage and Walker, respectively.
These sellers significantly increased the prices of products like face masks and hand sanitizer, both of which are highly sought by consumers during the coronavirus disease 2019 (COVID-19) pandemic.
“Unfortunately, greed and fear have been two constants during this medical crisis,” Nessel said. “As consumers fear the uncertainty surrounding the COVID-19 pandemic, they are falling victim to price-gouging and predatory business practices by individuals and companies looking to profit off that collective anxiety. I encourage consumers to continue filing complaints of price-gouging with my office so that my Consumer Protection team can investigate where appropriate and hold accountable those who think a public emergency is a free pass for unlawful profiteering.”
The Attorney General’s office alleges these third-party sellers on Amazon violated the MCPA by charging the consumer a price that is grossly in excess of the price at which similar property or services are sold, and causing coercion and duress as the result of the time and nature of a sales presentation. Some examples of those violations include:
- CollectiblesJi – This storefront sold a three-pack of 2-ounce bottles of hand sanitizer for about $33 with shipping. The average price of that product on Amazon was around $7.50. The seller also charged a consumer in Costa Mesa, California, a total of roughly $330 for two five-packs of 1-ounce bottles of hand sanitizer. A single pack of the same product sold for about $7 on average. Click here to view the cease and desist letter sent to CollectiblesJi.
- SmartHome Distribution – This seller charged a Michigan consumer nearly $130 for a four-pack of 30-ounce pump bottles of hand sanitizer. The average price of that product, according to Amazon’s 30-day average sales price, was slightly more than $14. This seller also exploited out-of-state consumers with excessive prices by offering the same hand sanitizer product to a person in Oregon for nearly $166. In addition, the storefront sold two 24-packs of 2-ounce travel-sized hand sanitizers to a consumer in Philadelphia for nearly $220. That same product generally sells for about $35. Click here to view the cease and desist letter set to SmartHome Distribution.
- Warehouse Bricks – This seller charged Michigan consumers between roughly $58 and $66 for a 20-pack of N95 respirators, while the average price on Amazon for that product was about $16. In another instance, the seller provided a 20-pack of N95 respirators to a consumer in Oklahoma for $81. The storefront also sold a six-pack of 4-ounce bottles of hand sanitizer for nearly $52, while the average price of that product was about $17. The seller also provided two five-packs of 2-ounce hand sanitizer to a Beverly Hills, California, consumer for nearly $40 each, about four times what they typically sell for. Click here to view a copy of the cease and desist letter sent to Warehouse Bricks.
The sellers have 10 days to respond to the Attorney General’s office, otherwise additional action could include the launch of a formal investigation through court subpoenas. The sellers could also agree to an Assurance of Voluntary Compliance (AVC), which is a tool provided for in the MCPA that allows for the resolution of a violation without litigation.
Meanwhile, the Attorney General’s office recently signed an AVC with an individual selling high-priced face masks online through eBay. The Hillsdale, Michigan, individual received a cease and desist letter from the Attorney General’s office in early March, and later said that he made more than $6,000 in profit by purchasing face masks primarily from another eBay retailer and reselling them to other consumers.
As part of this AVC agreement, the seller has paid the Attorney General’s office $6,000 for investigation costs and $100 to the victim who provided the office with information.
The Attorney General’s Consumer Protection team has been receiving a high volume of price-gouging complaints since early March as the state began seeing the appearance of COVID-19 cases. To date, there have been a total of 3,689 price-gouging complaints.
Consumers can file a complaint online or by calling the Consumer Protection tip line, 877-765-8388. Hours of operation are between 8:30 a.m. and 4:30 p.m. Monday through Friday.