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How Amazon raised prices to profit from the pandemic

 by Alex Harman

Part 6 - State Price Gouging Prohibitions Take Effect
 
Price gouging is illegal in about 35 states. Because there is no federal law protecting consumers from price gouging, states provide the only defense from unscrupulous sellers. While statutes and prohibitions vary across the states, they consistently include three facets. 

First, price increases are only prohibited when there is a declared emergency (hurricanes, earthquakes, flooding, or pandemics). 

Second, price increases are only prohibited on specific set of products that are deemed necessary or essential.

Third, the price increase must be due to the presumed increase in demand because of the emergency and not due to some other factor such a regular seasonal price increase or a new supplier.

Some states only hold the retail seller responsible, while other states will hold sellers further up in the supply chain responsible for the illegal price increases. It is not a violation of price gouging laws for a merchant to simply pass along an increase in wholesale supply or delivery costs to consumers.

The amount of increase in prices that violate price gouging statutes vary from state to state. Some state price gouging laws designate a specific percentage increase over which a price increase would be considered gouging. The prohibited percentages range from 10% to 25%. Other state laws use less precise language to describe prohibited price increases such as: “excessive,” “grossly exceeds,” “unreasonable,” “exorbitant,” or “unconscionable.”

Products covered by price gouging statues range from state to state. For example, in the District of Columbia the prohibition covers “any merchandise or service,” but in Virginia the prohibition covers:

Necessary goods and services for which consumer demand does, or is likely to, increase as a consequence of the disaster, and includes, but is not limited to, water, ice, consumer food items or supplies, property or services for emergency cleanup, emergency supplies, communication supplies and services, medical supplies and services, home heating fuel, building materials and services, tree removal supplies and services, freight, storage services, housing, lodging, transportation, and motor fuels.

By March 18, 2020, all states and territories had declared an emergency related to COVID-19, meaning that anti-price gouging rules went into effect in every state where a price gouging statute existed.


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