Heightened Demand Due to Coronavirus Results in Price Gouging

A shelf of thermometers sits empty in a west Michigan area Meijer. Grocery retail stores across the country are experiencing supply shortages as a result of the COVID-19 pandemic (Photo courtesy of Connor Robertson).

As many Michiganders adjust to life at home due to Governor Gretchen Whitmer’s “Stay Home, Stay Safe” executive order, some are still hard at work, including health care officials and service-based workers. With consumer demand for essential items nearing all time highs, retail home good stores are among the most essential service-based operations.

Recent shifts in demand are challenging these stores with an economic problem. In addition to figuring out how to keep the shelves stocked, these stores must also decide how to meet consumer demand for goods, materials, emergency supplies and food items.

Price gouging, the act of increasing prices of goods to a level that is considered unfair and unreasonable, is a method some sellers utilize to combat a supply or demand shock. Price gouging, however, is currently illegal in 40 states, including Michigan. Hundreds of recent complaints across the state of Michigan are accusing sellers of profiting on items in high demand due to COVID-19.

To combat these sellers, on March 20, Whitmer issued Executive Order No. 2020-18. 

It is stated in the order that “if a person has acquired any product from a retailer, the person must not resell that product in Michigan at a price that is excessively higher than the purchase price at which they acquired the product.” 

The order also restricts the resale of products at a price that is more than 20 percent higher than what was originally paid for it. The order is in effect until April 16 at 11:59 p.m.

On March 23, Michigan Attorney General Dana Nessel assembled a team of special agents to investigate the high volume of price gouging complaints. In a press release, Nessel said the goal is to hold sellers accountable in order to protect consumers in an especially volatile time. 

Nessel encourages Michiganders to be aware of this ongoing issue.

Public awareness of price-gouging can offer valuable support in our efforts to keep companies honest,” said Nessel. “But if stores continue to disregard the rules and raise their prices beyond justifiable amounts, then we will hold them accountable.”

On March 27, The New York Times reported an increasing amount of complaints across the country over price increases on essential items. According to The New York Times, state officials are urging companies like Facebook, Amazon, Craigslist, eBay and Walmart to help stop selling at unreasonable prices.

Amazon is battling price gouging on their massive online retail platform. In a statement on their news blog, the company reports that more than 3,900 selling accounts have been suspended for failing to follow Amazon’s pricing policies.

“We are constantly monitoring our stores for unfair prices and listings that make false claims in regards to COVID-19,” Amazon said in its statement.

In the press release for her March 20 Executive Order, Whitmer emphasized the importance of ethical business practices during this worldwide pandemic. Now more than ever, people should be cautious of those taking advantage of one another during the pandemic.

“These are challenging times, and we must support one another, not take advantage of others,” said Whitmer. “We will get through this together as Michiganders.”

If you suspect an incidence of price gouging, complaints can be filed online with the Michigan Department of Attorney General office.

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