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Pandemic Profiteering: Amazon Caught Price Gouging as Jeff Bezos’s Wealth Soared to $200 Billion

StorySeptember 15, 2020
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The online giant Amazon has made an extraordinary amount of money during the COVID-19 pandemic, as many people shelter at home and shop online. A new Public Citizen report documents how Amazon set prices for essential products during the crisis at levels that would violate price gouging laws in many states, and marked up some products by as much as 1,000%. “This is an ongoing thing. They are doing this currently. They’ve been doing it throughout the pandemic,” says Alex Harman, competition policy advocate for Public Citizen and author of the report. “They are looking to maximize profit during a pandemic.”

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Transcript
This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: This is Democracy Now! The Quarantine Report. I’m Amy Goodman, with Juan González.

As the COVID-19 pandemic keeps many of us sheltering at home and shopping online, the online giant Amazon said Monday it will hire 100,000 more workers to meet growing demand. Amazon CEO Jeff Bezos has made an extraordinary amount of money during the crisis. He saw his personal wealth increase by $48 billion between just March and June alone. He’s now the first person in the world to be worth $200 billion. Bezos has made so much, in fact, that Oxfam estimates he could give all 876,000 Amazon employees a one-time $105,000 bonus and still come away with as much money as he had before the pandemic.

This comes as a new report documents how Amazon set prices for essential products during the crisis at levels that would violate price gouging laws in many states. Public Citizen found Amazon marked up some products by as much as 1,000%. For example, disposable face masks sold for $40 instead of $4. Prices shot up amidst shortages for pandemic-related supplies in February and March, and are still high. This is New York Governor Andrew Cuomo announcing in early March that the state had started using prisoner labor to make hand sanitizer.

GOV. ANDREW CUOMO: Because you can’t get it on the market, and when you get it, it’s very, very expensive. … Also to Purell and Mr. Amazon and Mr. eBay, if you continue the price gouging, we will introduce our product, which is superior to your product, and you don’t even have the floral bouquet. So, stop price gouging.

AMY GOODMAN: For more on this new report, “Prime Gouging: How Amazon Raised Prices to Profit from the Pandemic,” we’re joined by Alex Harman, competition policy advocate for Public Citizen. He’s author of the report.

Welcome to Democracy Now! I bet it was extremely hard to get this information, Alex. Can you talk about how you got it, and the findings of your report?

ALEX HARMAN: Yeah, it was very hard. We searched for products on Amazon, and they were price gouging. This is an ongoing thing. They are doing this currently. They’ve been doing it throughout the pandemic.

And the “they” is the key, the key point. When this first started, there was a lot of talk about — from Amazon and from others, about third-party sellers taking advantage and gouging. We heard about hand sanitizer, toilet paper, other things. And then, so we started looking at this to give people guidance on how they could protect themselves, how they could avoid it. And it became very clear very quickly that, yes, third-party sellers are still doing this, despite Amazon’s claims of closing those accounts and removing those products, but Amazon itself is also doing this. And the distinction is, on the website, when a third-party seller is selling, it says “sold by” that seller, and when it’s Amazon selling, it says “sold by Amazon.” And so we focused on products that were sold by Amazon that had significant price increases.

And it’s very important to point out, the products we’re talking about — and it’s a sample of products — are deemed essential, and, that is, under price gouging statutes, are defined as during an emergency, and then specific products that are essential to that emergency. So, you’re going to have water during a hurricane or during a wildfire, and in this case, hand sanitizer or PPE-type products and toilet paper, we learned.

JUAN GONZÁLEZ: Could you give some examples of some of the levels of the increases in prices on some of these particular products? And also, could you talk about this whole issue of how China became a big source, in the months after the initial outbreak of the pandemic, for some of these products?

ALEX HARMAN: Sure. And so, one of the things we don’t know is much about sourcing, right? So, Amazon is not very transparent about where they’re getting products, who their wholesalers are. A given product can flip back and forth between being sold by Amazon and being sold by a third party, and then the sourcing can be all over the place. And so, we weren’t looking at, you know, the questions of counterfeits or the questions of quality, because they just don’t make that information available on their — you know, through their search.

But, yeah, the types of products, you know, as I mentioned, toilet paper. We looked at toilet paper, paper towels, hand soap. And we were looking for products where there was a significant price increase. So, price gouging statutes range from state to state. Most states have them, but it tends to be a minimum, on the low end, a 10% increase is price gouging. In other states it’s more amorphous, but figure 25%. And so, the lowest price increase we found on these products that we identified was about 50%. And then the highest, as Amy mentioned, was close to — or, slightly over 1,000%. But so, for example, an eight-pack of paper towels was over a 500% increase.

And the type of increase we’re talking about, what we’re comparing to, ideally, we were comparing it to previous Amazon prices. So it was truly apples to apples. Where we could, we would find that product concurrently available at another national online retailer for significantly lower. And then that was — what we called it was the expected price. So it’s the price that others are selling it for or Amazon has previously sold it for.

JUAN GONZÁLEZ: Now, many people are familiar with the whole idea of war profiteering, but we’re talking here about pandemic profiteering or disaster profiteering by these companies. What can be done in a situation where you’re talking about an international company, clearly, servicing its customers over the internet, and local state price gouging laws? What needs to be done?

ALEX HARMAN: So, if you do business in a state — and while Amazon is online, they are definitely in states with their warehouses and their distribution channels, and so they should be subject to all of the various state laws. However, we are advocating for a federal law to fill the gaps between the various state laws and the states that don’t have laws.

But also, during the pandemic, in Kentucky, the attorney general there brought some cases against some third-party sellers, in partnership with Amazon, actually. And a outside group, a D.C.-based group, sued the Kentucky attorney general over their price gouging statute, arguing that its attempt to regulate online prices was in fact unconstitutional, as it basically was Kentucky setting the price for all states. And that, they won in Kentucky. And so, as it stands, the Kentucky statute is invalid.

Other states have not had those challenges, but it’s a reasonable possibility that they could, if they attempt to enforce them. And so, we believe that it’s clearer than ever that we need a federal statute. And to be clear, there is no federal crime of price gouging currently.

AMY GOODMAN: So, I wanted to go back to this issue we raised in the lede of Bezos becoming, to say the least, the wealthiest man in the world, $200 billion, right? Two hundred billion dollars, he will — he’s the first person in the world to have made that. Bezos has made so much, in fact, that Oxfam estimates he could give all 876,000 Amazon workers a one-time $105,000 bonus and still come away with as much money as he had before the pandemic and his price gouging. Talk more about this and also Amazon saying they’re going to hire 100,000 more workers.

ALEX HARMAN: A hundred thousand more workers at effectively minimum wage. Yeah, it is troubling. And we focused on how Amazon presented price gouging. Amazon came out very early saying that it was unacceptable to them. Bezos himself identified this issue in his shareholders letter in April. And so, our primary concern was: Are they doing anything? And we would argue they’re not. It has been a marketing campaign, in our view, not an actual effort to stop this process. And they would argue that it is — there’s millions of products, and it’s a whack-a-mole-type process to try to stop this. Well, you can right now go to Amazon.com and start searching for essential products and find price gouging. This is not a whack-a-mole; this is a pervasive problem. And they are doing nothing. And so, the only conclusion we can draw is they either don’t care or there is a profit motivation here. And it is important to note, we were focused on Amazon as the seller, but they have arguably a greater profit motivation when it is a third-party seller engaging in this. And so, the fact that third-party sellers are continuing and Amazon themselves are doing this suggests that they do not see this as a problem, because they are looking to maximize profit during the pandemic.

AMY GOODMAN: Alex Harman, we want to thank you for being with us, with Public Citizen, author of the new report, “Prime Gouging: How Amazon Raised Prices to Profit from the Pandemic.” And that does it for our show. We’ll link to that at democracynow.org.

Democracy Now! is produced with Renée Feltz, Mike Burke, Deena Guzder, Libby Rainey, Nermeen Shaikh, María Taracena, Carla Wills, Tami Woronoff, Charina Nadura. I’m Amy Goodman, with Juan González. Thanks so much for joining us. Wear a mask. Stay safe.

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