April 20, 2020 by Ben Chafetz

Coronavirus And eCommerce Price Gouging- Just Say No

The COVID-19 coronavirus pandemic has eCommerce sales booming. With many non-essential stores shut down and the higher risk of infection that shopping in-person brings, retailers like Amazon are doing record sales online.

And while most retailers are engaging in ethical practices and selling must-have items like hand sanitizer, cleaning supplies, and face masks at market rates, some companies and individuals have not been as above-board.

COVID-19 coronavirus has exposed the world of eCommerce price gouging. In this article, we’ll take a look at the basics of price gouging, and explain how the coronavirus pandemic illustrates that it’s never a good idea. Let’s get started.

Case Studies – How Coronavirus Has Exposed Price Gouging In eCommerce

Price gouging related to COVID-19 coronavirus began early. In early March, before most states in the US had instituted social distancing and shelter-in-place articles, a man from Tennessee stockpiled more than 17,700 bottles of hand sanitizer with help from his brother – driving from store to store to purchase essential cleaning supplies, hand sanitizer, and more.

The brothers had the intention of selling these items on Amazon for a massive profit – but quickly thereafter, Amazon instituted strict price-gouging policies on its stores. Eventually, the items stockpiled by the two brothers were seized by the Tennessee Attorney General and were “donated” to the state of Tennessee shortly afterward.

This same pattern is happening across various eCommerce platforms and stores. Price gouging complaints are surging across the country, for brick and mortar stores as well as eCommerce stores. Packs of 15 N95 masks are being sold for $3,799 on Amazon. 

Things have gotten so bad that attorneys general from 33 states have come together to ask websites like Amazon, Walmart, eBay, and even Facebook and Craigslist to crack down on sellers who are price gouging on supplies like hand sanitizer, soap and cleaning supplies, face masks, and even toilet paper.

Price Gouging Is Unethical And Can Have Serious Legal Consequences

The very act of price gouging is unethical, particularly when taking advantage of a major emergency incident like the COVID-19 coronavirus outbreak. It encourages retailers to hoard essential supplies that everyone needs and sell them only to those who can afford sky-high prices.

Imagine if there was a major earthquake in California that knocked out water service for Los Angeles and water companies took advantage- and pumped up the price by 1000%. Does that seem ethical to you? 

Obviously not. This kind of behavior should never be encouraged. This is especially true because low-income individuals are often at the highest risk during crisis situations, due to a lack of resources that higher-income individuals can easily afford. Price gouging further limits access to goods that many desperately need. 

Not only is price gouging unethical, but it’s illegal in most cases. 40 states have laws on the books about price gouging – and while they usually allow retailers to raise prices slightly, these limits amount to a 10-30% increase compared to the fair market value of the goods. 

Depending on the state in which price gouging is conducted, the penalty can range from $1,000-$10,000 or more per incident – and particularly serious offenses carry the risk of up to a year of jail time.

A Good Reputation Is Everything In eCommerce – Don’t Risk Yours! 

If your eCommerce store doesn’t sell essential items that are needed during the COVID-19 coronavirus outbreak – such as hand sanitizer or face masks – you may think this topic is not relevant.

But the takeaway we’d like you to think about is this: is it worth risking the reputation of your eCommerce store to make a quick buck? Because that’s what these retailers and individual sellers have done.

They have violated both legal and ethical principles to make extra money from people who are living in crisis and are willing to overpay for essential goods. And for those who are engaging in price gouging and are found out, the legal and moral consequences are sure to be profound.

In eCommerce, reputation is everything. You’ve spent countless hours building the reputation of your online store and your products – by providing great customer service, answering questions about your products and services, running social media accounts, responding to positive (and negative) customer feedback, and so much more.

It’s never a good idea to risk all that work to make some extra money. And that goes for more than just price gouging. Your reputation is valuable, and you shouldn’t endanger it by engaging in any kind of unethical eCommerce behavior, such as:

  • Knowingly selling shoddy or counterfeit products in your store
  • Failing to abide by your return/exchange policies
  • Failing to secure customer information with encryption and proper security measures
  • Listing products inaccurately via text or images that do not represent it properly

To protect your online reputation, you need to always make sure you stay above-board in how you conduct business – during times of normalcy, and times of crisis. 

Do You See Price Gouging Online? Report It To The Authorities! 

We’re all in this together. So if you have noticed price gouging on any eCommerce website or platform, you can take action. This page from the Consumer Protection Organization has tools that will allow you to file a complaint with the Attorney General in your state.

Stay safe, and if you’d like to read more about eCommerce best practices and how to improve your store’s reputation, take a look at the 121eCommerce blog. We’ve got plenty of articles that are sure to help you boost sales, improve your brand image, and much more. 

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