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Top Amazon exec calls for federal price gouging law amid coronavirus scams

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Key Points
  • In a blog post Wednesday, Brian Huseman, Amazon's vice president of public policy, called for the establishment of a federal price gouging law. 
  • While there are price gouging laws in some states, Huseman said they don't go far enough in protecting consumers against unfair pricing during crises such as the coronavirus pandemic.
  • Third-party sellers were charging unfair prices for in-demand items like face masks and hand sanitizer.
A man wearing a face mask holds a box of the American electronic commerce company Amazon in Central district, Hong Kong.
Miguel Candela | SOPA Images | Getty Images

A top Amazon executive is calling on Congress to establish a federal price gouging law so that the U.S. can more effectively combat the kinds of unfair pricing of face masks and sanitizer witnessed on its site during the pandemic.

In a blog post Wednesday, Brian Huseman, Amazon's vice president of public policy, said the company "stands ready" to work with officials on developing comprehensive price gouging legislation.

Price gouging legislation would help "protect consumers" from bad actors who have sought to profit off of the COVID-19 outbreak, as well as any other national crises in the future, Huseman added. Currently, there are state price gouging laws in about two-thirds of the U.S. 

"While each state is unique and has the ability to enact individual legislative price gouging triggers and remedies, a federal price gouging law would ensure that there are no gaps in protection for consumers," Huseman said. "This would also help retailers like Amazon more effectively prevent bad actors and ensure fair prices."

During the pandemic, Amazon, Walmart and other e-commerce companies struggled to curb third-party sellers who overcharged for products that spiked in demand. Sellers inflated prices for face masks, hazmat suits 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.

Huseman said Amazon has removed "well over half a million offers" believed to be gouging customers and suspended nearly 4,000 selling accounts in the U.S. for violating its fair-pricing policies. Amazon has also turned over to federal prosecutors and state attorneys general nationwide information on sellers it suspects engaged in coronavirus-related price gouging. 

Huseman laid out several provisions he feels should be added to a federal price gouging law, including giving the Federal Trade Commission (FTC) the power to go after price gouging, allowing for "more expeditious enforcement." He added that the pricing standards should take into account any unavoidable rises in supply, transportation and labor costs that businesses face during a crisis. 

"Put simply, we want to avoid the $400 bottle of Purell for sale right after an emergency goes into effect, while not punishing unavoidable price increases that emergencies can cause, especially as supply chains are disrupted," Huseman said.

Previously, Amazon faced wide-ranging criticism for its failure to crack down on price gouging and products that made misleading claims about the coronavirus. Some third-party sellers exploited fears about the virus by incorrectly marketing face masks with specific keywords like "coronavirus face mask." 

Amazon's call for regulation echoes similar recent calls from Facebook. In February, Facebook CEO Mark Zuckerberg said governments should create regulations for harmful online content instead of relying on social media companies to tackle the problem on their own

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