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Nessel Takes Action Against Online Retailer as COVID-19 Price-gouging Complaints Rise
March 18, 2020
Michigan Attorney General Dana Nessel took her first action against an individual selling high-priced products online through eBay as her department amps up efforts to pursue price-gougers. Meanwhile, the number of price-gouging complaints related to coronavirus disease 2019 (COVID-19) submitted to the Michigan Department of Attorney General continues to grow.
Nessel’s office had received 572 price-gouging complaints as of 11 p.m. Tuesday. The Attorney General’s Consumer Protection team has been gathering the complaints online and through its phonelines at 877-765-8388. Nessel personally staffed the hotline Tuesday night along with other intake workers.
The phonelines are usually open from 8:30 a.m. to 4:30 p.m. Monday through Friday. Hours were extended earlier this week to keep up with demand and will be extended again from noon to 5 p.m. Saturday and Sunday.
The number of price-gouging complaints received since Friday afternoon (75) has increased by 662 percent.
“Our primary focus is consumer protection and ensuring that Michiganders have access to the goods they need at reasonable prices,” Nessel said. “We are not looking to shut down companies or financially jeopardize any business owner with fines, but when proprietors are not following the laws, we will take swift legal action to protect the pocketbooks of residents in this state. I can assure you that anyone trying to illegally profit off this public health emergency will be held accountable.”
The Attorney General’s office issued a Notice of Intended Action (NIA) letter today asking an individual in Hillsdale to cease and desist reported price-gouging practices of selling face masks online for high prices. This action is the first taken by the Attorney General’s office against an online seller.
Additional action the Attorney General’s office has taken so far includes:
- Issued an NIA letter to Menards directing the company to cease and desist price-gouging practices;
- Sent an NIA letter to A.M. Cleaning and Supplies directing the store to cease and desist price-gouging practices;
- Contacted several business owners seeking more information if they wished to avoid further investigation or legal action by the Attorney General’s office.
Under the Michigan Consumer Protection Act, a business found to be price-gouging could face legal action, and be required to pay damages to consumers and civil penalties of up to $25,000 for knowing and persistent violations – if the store fails to comply with the Attorney General’s cease and desist order.
In addition, Gov. Whitmer’s Executive Order 2020-08 makes specified price-gouging behaviors criminal misdemeanors, which can be prosecuted on top of civil action under the Michigan Consumer Protection Act.
While an injunction to shut down a store is possible under the Consumer Protection Act, that is not the focus of the Attorney General’s office. The focus is to ensure consumers have access to goods at prices that make sense, and not prices rooted in an effort to exploit during a public emergency. However, the Attorney General’s office will seek injunctions when individuals are attempting to run their own stores by purchasing products from another retailer and selling them out of the trunks of their cars, for example.
Some of the products mentioned in the complaints include toilet paper, bottled water, meat, milk and cleaning products like hand sanitizer, disinfectant wipes, rubber gloves, bleach, etc.
More recent complaints have included reports of businesses breaking up bulk packages of products and selling items individually, and stores selling products they don’t generally offer – all at reportedly high prices. Some products that were allegedly being resold at marked-up prices still had sticker tags or labels from the business where it was originally offered.
Gov. Gretchen Whitmer issued an executive order Sunday to specifically address price-gouging related to COVID-19. That order, in part, states no business or person can sell products grossly in excess of the purchase price at which they bought the product. It also says products cannot be sold or offered at a price that’s more than 20 percent higher than what it was listed as of March 9, 2020 – unless the seller can justify the higher price due to an increase in the cost of bringing the product to market.
Meanwhile, legislation introduced in the Michigan Senate would create additional tools for investigators to rein in price-gouging. The bipartisan bills would add price-gouging protections during an emergency declaration or market disruption. Nessel recently stated her support for the legislation.
Retailers may be in violation of the Michigan Consumer Protection Act if they are:
- 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.
Michigan residents are urged to report any violation of the Consumer Protection Act online or by calling 877-765-8388.
Information around the COVID-19 outbreak is changing rapidly. The latest public health information is available online at a state website focused on the issue and at the Centers for Disease Control and Prevention.