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SACRAMENTO, March 20, 2020 – California Attorney General Xavier Becerra today sent several letters calling on large online marketplaces to intensify their efforts to combat price gouging related to novel coronavirus—or COVID-19—on their platforms. Many platforms are currently, or were until recently, flooded with potentially illegal postings by third-party sellers for products listed at highly inflated prices.
“Price gouging during a time of national emergency is not only disgraceful, it is illegal,” said Attorney General Becerra. “Large online marketplaces have a responsibility to the public to take immediate and vigorous steps to eliminate predatory behavior, which they know is illegal, from their platforms. The California Department of Justice calls on all online marketplaces to act now and act seriously to eliminate price gouging on their websites. Anyone who has been the victim of price gouging related to COVID-19 should immediately file a complaint through my office’s website at http://oag.ca.gov/report.”
In the letters, Attorney General Becerra encourages all online marketplaces to consider taking the following steps if they have not already done so:
- Supplement algorithmic management of postings on their website with meaningful human review. It is clear from the volume of potentially illegal postings that algorithms currently in use are not up to the task of filtering out posts that price gouge.
- Ensure that algorithms and human review include shipping costs in order to prevent price gouging by sellers who attempt to evade detection by increasing shipping costs rather than base prices.
- Ban third-party sellers that engage in price gouging or offer other predatory products using their platform. These sellers should not be allowed to operate in the marketplace.
- Ban sales by new third-party sellers of certain items that are particularly ripe for price gouging abuse, such as surgical masks, cleaning supplies, hand sanitizer, certain household goods, and paper products. Allowing only long-time third-party sellers to sell these products will reduce the opportunity for abuse by new third-parties looking to make a quick buck off of a crisis.
- Restrict or eliminate features that allow products that are particularly ripe for price gouging to be posted for bid rather than set prices to prevent bidding wars that unfairly drive up prices of high-necessity goods.
- Contact the Attorney General’s Office for referral of bad actors that they have identified on their platforms.
Attorney General Becerra reminds all businesses that are marketing or selling products to Californians – whether in person or online – that, under Penal Code Section 396, price gouging is illegal in all California communities during a declared state of emergency. California law generally prohibits charging a price that exceeds, by more than 10 percent, the price of an item before a state or local declaration of emergency. This law applies to the prices of certain goods or services when a declared state of emergency results in disruptions of the market, including with respect to food, emergency and medical supplies, and other consumer goods. Exceptions to this prohibition exist if, for example, the price of labor, goods, or materials has increased for the business.
Violators of the price gouging statute are subject to criminal prosecution that can result in a one-year imprisonment in county jail and/or a fine of up to $10,000. Violators are also subject to civil enforcement actions including civil penalties of up to $2,500 per violation, injunctive relief, and mandatory restitution. The Attorney General and local district attorneys can enforce the statute.
For the latest on coronavirus preparedness, information, and response, please visit the websites of the California Department of Public Health, Office of Governor Gavin Newsom, and Office of Emergency Services. If you are a worker or employer who has been affected by COVID-19, you can find guidance and resources on the California Labor and Workforce Development Agency’s website.