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AG's Office Signs Agreement with Oakland County Business After Alleged Price-gouging
December 21, 2020
LANSING – While the COVID-19 pandemic persists, the Michigan Department of Attorney General remains active in its efforts to protect consumers from predatory and deceptive business practices.
Attorney General Dana Nessel’s office recently signed an agreement with Smokehouse Distribution, an Oakland County business in Commerce Township that allegedly violated the Michigan Consumer Protection Act (MCPA) by engaging in practices like price-gouging.
The business was advertising excessively priced face masks for sale on a website called BeamerSmoke. The Attorney General’s office began receiving consumer complaints about the business in April, and sent a cease and desist letter in early May. The Assurance of Voluntary Compliance (AVC) agreement with the business follows an investigation by the Attorney General's office after it received approval for civil investigative subpoenas from the Oakland County Circuit Court on June 23, 2020.
The AVC requires the business to refund customers who purchased the over-priced personal protective equipment and refrain from selling such products again for COVID-19 purposes.
“From the outset, my office has been committed to protecting consumers from retailers who try to use this pandemic as an excuse to prey on the vulnerabilities of hard-working people,” Nessel said. “We will continue to be vigilant and follow through on credible consumer complaints to ensure Michigan residents are not being taken advantage of.”
Smokehouse Distribution advertised 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. After the Attorney General’s office contacted the business about consumer complaints it had received, the business returned much of its mask inventory to its supplier.
Under terms of the AVC, the seller will provide full refunds to specific consumers who purchased face masks and gloves on the company’s website in April. Customers who will receive a refund will be contacted by the business. Refunds must be provided to consumers within 60 days.
The AVC also requires:
- A $2,000, one-time payment made to the Michigan Department of Attorney General to cover investigation costs;
- An assurance by the seller that no face masks will be sold or advertised for any medical or COVID-19 protection purposes.
An Assurance of Voluntary Compliance agreement is a tool provided for in the MCPA that allows the Attorney General’s office to settle disputes with businesses that have allegedly violated the MCPA without litigation.
To view more about the MCPA and the Attorney General’s efforts to protect consumers, visit the department’s website.
Consumer complaints may also be filed online by visiting the Attorney General’s Consumer Protection website.