Amazon is blocking new offers for face masks, hand sanitizer and other coronavirus-related products on its site, marking its latest effort to stamp out price gouging.
The company confirmed to CNBC that it sent out a notice to sellers this week informing them that it's not accepting applications to sell "disposable face masks, hand sanitizers, disinfecting wipes/sprays, isopropyl alcohol or related products."
While Amazon is blocking new offers, it won't remove existing listings in these categories unless they appear to be gouging shoppers in violation of the company's fair pricing policy. For sellers whose listings are removed, Amazon said it will reimburse merchants for any fulfillment fees they incur after requesting Amazon return their inventory or destroy it. Amazon charges a fee for each unit removed from its FBA warehouses.
With many products sold out in stores, shoppers have turned to online retailers to buy face masks, hand sanitizer and other items to protect against the coronavirus. Amazon, like other e-commerce companies, has struggled to police sellers who have sought to take advantage of the panic and flooded online marketplaces with overpriced goods. In recent days, however, Amazon has taken a number of steps to crack down on price gouging and products that make dubious medical claims.
Here's what Amazon is telling sellers:
You are receiving this message because you are currently selling, or have previously sold, products such as disposable face masks, hand sanitizers, disinfecting wipes/sprays, isopropyl alcohol or related products.
We have implemented more stringent requirements to sell these products in our store and as a result, your offers have been removed. We are not accepting applications to sell these products at this time.
If you have any remaining inventory of these products in Amazon's fulfillment centers, you will need to create a Removal Order and Amazon will reimburse you for the return or disposal fees through May 31, 2020. If you believe Amazon erroneously identified your product for removal, please contact Seller Support.
Users in Amazon's Seller Central forum posted about warnings they received from Amazon this week, including one seller who said they were concerned the ban would hurt legitimate sellers.
"Yes it's good that Amazon is going after gougers...but when honest B2B sellers in the [Business Industrial and Scientific Supplies] category that have been selling this stuff for years at these completely fair prices get flagged, and meanwhile there are literally thousands of listings for tiny bottles of Purell for $80 each, there is a major issue in the methodology," a user wrote on the Seller Central forum.
An Amazon seller told CNBC that Amazon suspended his account on Tuesday after he listed a package of 20 3M N95 masks. This seller requested anonymity because he feared Amazon would retaliate.
The seller said he was offering the face masks for $90 a box and that he paid Amazon $130 to have his remaining inventory shipped back to him. Because his account is under review, the seller said he hasn't received any of the money made from sales of the masks. He feels it was unfair of Amazon to take down the listing, but that he's considering selling the masks on Shopify or Craigslist.
Another seller, who requested anonymity, said he sold out of 3M N95 masks when he first listed them in late January.
This week, his listing was shut down and he was left with a lot of leftover stock, but he was able to offload the masks onto a fire department in Broward County, Florida. "They took all the stock because they are in need of them," the seller said.
An Amazon spokesperson said the company has zero tolerance for price gouging on the site and said Amazon has removed hundreds of thousands of offers from sellers that it accused of charging customers unfair prices. The company previously said it removed more than 1 million products that made suspect or misleading claims about the coronavirus.
To further crack down on price gouging, Amazon is also preventing sellers from bidding on "coronavirus" as a keyword to advertise their products as sponsored listings.
When shoppers search for a product on Amazon, they may see products that show a "sponsored" label. The label signifies products that are keyword-targeted ads. Sellers and brands bid on particular keywords and the higher they bid, the more likely it is that their product will be featured at the top of search results.
Prior to the ban, Amazon had faced pressure from officials who called for it to take action against price gouging. Senator Ed Markey, D-Mass., wrote a letter to Amazon last week asking it to provide more information about what steps its taking to prevent price gouging. In its response, Amazon said it was aggressively enforcing its fair pricing policy and removing examples of price gouging.
CNBC previously reported Amazon, Walmart and other e-commerce companies have struggled to curb third-party sellers who are overcharging for products that have spiked in demand amid the spread of the coronavirus. Last week, eBay introduced a blanket ban of sales of face masks and hand sanitizer to prevent price gouging.
Seller inflated prices for hazmat suits, face masks and hand sanitizer, among other products. For example, before Amazon ran out of stock, N95 face masks were priced at $13.28, but CNBC found examples of face masks being sold for as much as $195.
Amazon shares closed down more than 7% on Thursday during an historic market sell-off.
Clarification: Amazon clarified after initial publication of this story that it's blocking new sale offers for disposable face masks, hand sanitizers, disinfecting wipes/sprays, isopropyl alcohol and related products. Amazon's marketplace allows several third-party sellers to submit offers on a single product listing.