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AG Nessel Continues Consumer Protection Work with Price-gouging Enforcement
May 26, 2020
LANSING – As Michigan’s fight against a deadly pandemic continues, Attorney General Dana Nessel has stayed the course in protecting consumers from businesses and retailers charging excessively high prices for products.
Nessel’s office has taken multiple actions to rein in predatory business practices by both brick-and-mortar establishments and online sellers throughout the coronavirus disease 2019 (COVID-19) pandemic.
“This public emergency is not an excuse to rip people off, and my office will remain vigilant in our efforts to protect consumers from being taken advantage of,” Nessel said. “I am committed to serving the people of Michigan and I will not allow predatory businesses to profit off vulnerable people who are concerned for their well-being and faced with the uncertainty surrounding this crisis.”
Since early March when COVID-19 concerns became present in Michigan, Nessel’s office has received more than 4,200 complaints about businesses and individuals who are price-gouging consumers during this crisis, but some of these complaints do not warrant further investigation and, unfortunately, many do not contain enough information to verify the complaints as legitimate.
Consumers are encouraged to file a complaint online with the Attorney General’s office so that the complaint contains as much information as needed to properly evaluate a response.
Recent actions the Attorney General’s office has taken with respect to price-gouging include:
A.M. Cleaning & Supplies
A.M. Cleaning & Supplies in Ann Arbor has been under investigation by the Attorney General’s office for price-gouging for several weeks, and the business has failed to provide documents requested by investigators. The Attorney General’s office recently filed a motion in Washtenaw County Circuit Court to enforce its civil investigative subpoena, along with a brief in support of that motion. The motion asks the court to order production of the documents, and to impose a $1,000 civil fine for the non-compliance.
The Attorney General’s office has received multiple consumer complaints against A.M. Cleaning that allege the store drastically increased its prices of hand sanitizer. Complaints began after the business posted a message on social media advertising hand sanitizer at $60 for a 12-ounce bottle, $40 for an 8-ounce bottle and $20 for a 4-ounce bottle. Days before, the bottles were reportedly priced at $7.50, $5 and $2.50, respectively.
The Attorney General’s office recently completed an Assurance of Voluntary Compliance (AVC) with BioMed Wellness Center. An AVC is a tool provided for in the Michigan Consumer Protection Act (MCPA) that allows for the resolution of an alleged violation without litigation.
BioMed was the subject of a cease and desist letter from the Attorney General’s office in early April. The Attorney General was concerned about BioMed’s apparently excessive prices on products like gloves and hand sanitizers in comparison to other companies selling the same or similar products.
Under the AVC, the business agreed to reduce its prices on sanitizers, gloves and face masks. It also is paying the State of Michigan $2,000, most of which is designated for reimbursements to consumers through a claims process to be administered by the Attorney General. Consumers who believe they have paid too much for sanitizer, gloves and face masks from BioMed should save their receipts and file a complaint. They will then be sent a claim form.
The Attorney General’s office sent a cease and desist letter to Smokehouse Distribution, a business located in Commerce Township, which was advertising face masks for sale on a website called BeamerSmoke.
The proprietor advertised the surgical-type masks at two for $18 and admitted to investigators that the masks were purchased for about 56 cents apiece. The proprietor also said the higher price was an error that was addressed as soon as it was discovered. However, the price for two masks then dropped to $12 and $10, still a significant markup.
The owner indicated only 17 sales of face masks occurred through the website, but an invoice provided to the Attorney General’s office shows the business purchased nine cases of 2,000 masks each from a supplier.
The business has 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 business could also agree to an AVC.
Amazon Online Sellers
The Attorney General’s office signed AVCs with several online sellers operating digital storefronts through Amazon. The office signed AVCs with sellers operating under the usernames CollectiblesJi, Dealz N-KY, Happy Small Hands, HotDealz73 and Warehouse Bricks.
- CollectiblesJi and Warehouse Bricks were both issued cease and desist letters by the Attorney General’s office in late April. CollectiblesJi was alleged to have grossly inflated the prices of hand sanitizer products sold to consumers. Under the AVC with CollectiblesJi, the seller may continue to offer goods online, but will no longer sell sanitizer, face masks or other consumer goods associated with protection from the COVID-19 pandemic. The seller will also make a payment to the state of nearly $1,800 to compensate for investigative efforts, along with around $210 in refunds to victimized customers.
- Warehouse Bricks signed an AVC agreeing not to sell products related to protection from COVID-19 and to compensate the state roughly $3,025 for its investigative work and reimburse consumers around $475 for allegedly overpriced products.
- Dealz N-KY was sent a cease and desist letter in early April, along with Happy Small Hands and HotDealz73. Dealz N-KY is an out-of-state seller, while the other two are located in Michigan. Under the AVC signed by Dealz N-KY, the seller agrees not to sell products related to COVID-19 protection, and to pay the state $1,050 to compensate investigative efforts and reimburse about $575 to consumers.
- Happy Small Hands, or Modern Creations LLC, was allegedly inflating the price of face masks and hand sanitizer products it was selling to consumers. The seller signed an AVC and indicated it would no longer sell those products sought by consumers during the COVID-19 pandemic, as well as pay the state an amount of $2,500 to compensate for its work, along with reimbursing consumers for roughly $315 spent on such products.
- HotDealz73 also was allegedly overpricing face masks and sanitizer and agreed not to sell those products and others related to protection from COVID-19 under its AVC. Also as part of the agreement, the seller will compensate the state with $375 and provide customers about $125 in reimbursement.