As we adapt to the “new normal,” producers and suppliers at all levels of the distribution chain must continue to be cognizant of their pricing and the laws that seek to place a ceiling on those prices. Cases continue to be brought and legislation proposed.
In the first few months after the COVID-19 pandemic began and states of emergency were declared, several price-gouging lawsuits were initiated—some by consumers, some by large companies and others by State Attorneys General. As we discussed in a prior article, state price-gouging laws differ, but each has in common a limitation on the seller’s ability to price its products higher than before the declared state of emergency. Given that most declarations have been extended for several months, companies need to remain cognizant of where their current pricing stands in relation to where it was back in January or February.
That admonition has been driven home over the last few months. For example, in June, a putative class sued Albertsons for allegedly increasing prices for high-demand items such as toilet paper and medical supplies. More recently, both New York and West Virginia sued egg suppliers for allegedly increasing their prices during the pandemic. N95 mask manufacturer 3M has engaged in a national campaign against price gougers by incorporating trademark infringement claims. That campaign has resulted in settlements with sellers, most recently on Aug. 13, 2020 in a settlement in the Central District of California against three online sellers.
The push for a federal price gouging statute continues. At an Federal Trade Commission Oversight Hearing, U.S. Sen. Maria Cantwell (D-WA) announced plans to introduce federal legislation targeted at price gouging. Sen. Cantwell, the ranking member of the Senate Committee on Commerce, Science & Transportation, issued a press release on Aug. 5, 2020, stating she “plans to introduce legislation to make it a federal crime to gouge consumers during emergencies like the ongoing COVID-19 pandemic. . . . [The] legislation would also crack down on sellers of fake goods, making clear that it is illegal to peddle items like defective masks or fake COVID-19 cures.” Specifically, the law would “do two things: to move both on a price gouging definition to make sure the law is clear that consumers can be protected in this area, and to enforce civil penalties for deceptive COVID scams.” At the hearing, the FTC commissioners agreed with Sen. Cantwell, and publicly declared their support for federal price-gouging legislation.
Bottom line: Companies must stay informed of the ever-changing legal landscape that governs their pricing and distribution. While many companies and many markets have settled into a more routine pattern of demand and supply, the effects of the pandemic are still being felt. And with restrictions on business operations and daily life continuing, there is no reason to suspect that demand spikes and supply shortages will not cause again the type of pricing that is susceptible to price-gouging claims. Finally, as we head into the final days of summer, other potential emergencies – forest fires and hurricanes, to name a couple – will only exacerbate the effects of COVID-19.
As always, stay safe, stay healthy and stay tuned.
Information about COVID-19 and its impact on local, state and federal levels is changing rapidly. This article may not reflect updates to news, executive orders, legislation and regulations made after its publication date. Visit our COVID-19 resource page to find the most current information.