Allegations of Amazon Price Gouging in COVID-19

The COVID-19 pandemic has brought Canadian online shopping to new heights, doubling sales and hitting record peaks.[1] While access to products in a safe and efficient manner has benefits, consumer advocacy groups are calling attention to harmful pricing practices of the online giant Amazon during the pandemic.

A Washington-based Public Citizen advocacy group claims that Amazon increased prices by 300 to 1000 percent on essential products in March and April 2020, thereby profiting from the global pandemic.[2] Products included hand sanitizer, soap, masks, gloves, and other items in high demand like flour. Amazon refuted these claims, stating they were aligned with national laws against price fixing[3] and passed the blame onto third-party sellers.[4] The advocacy group criticizes Amazon, stating that Amazon both increased its own prices and allowed third-party sellers to do the same, further increasing profits because of increased third-party seller fees.[5]

Some of the controversy comes down to differences between price gouging and supply and demand price variability. While supply and demand may explain raised prices on hand sanitizer in a local grocery store, the size and buying power of Amazon is a key feature allowing it to maintain low prices and high stock. This is not the first time Amazon has been accused of permitting price gouging by third-party sellers: post-hurricane Irma, Amazon attempted to explain away increased prices from third-party sellers as only having become apparent when the lower priced options sold out.

In addition to current US State price gouging laws, Amazon has its own policies that prohibit their third-party sellers from using an emergency for profit. But advocacy groups assert that Amazon is not doing enough to enforce its own pricing policies and that Federal oversight and objectivity is needed.[6] And why would it vigilantly police pricing if there are no checks and balances, and it is experiencing booming profits as a result?

With pandemic lockdowns reinstated and online holiday purchases at an all-time high, online shopping has never been more needed, or more utilized. Though Amazon claims it will increase its policing, removal of offers, and suspension of seller accounts for price-gouging, only time – and online shopping prices – will tell.[7]

[1] https://www.cbc.ca/news/business/online-shopping-covid-19-1.5661818
[2] https://www.citizen.org/article/prime-gouging/
[3] https://blog.aboutamazon.com/policy/its-time-for-congress-to-establish-a-federal-price-gouging-law
[4] https://www.cbc.ca/news/business/amazon-price-gouging-1.5719050; https://blog.aboutamazon.com/company-news/price-gouging-has-no-place-in-our-stores
[5] https://www.cbc.ca/news/business/amazon-price-gouging-1.5719050
[6] https://www.cbsnews.com/news/amazon-price-gouging-consumer-watchdog/; Most state laws use reasonable and relevant references for definitions of price gouging, making prices appropriate if comparators are also high, lacking examination of the actual price.
[7] https://www.foxbusiness.com/technology/amazon-to-step-up-efforts-to-combat-price-gouging-amid-second-wave-of-panic-buying
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