Two California residents have brought a class-action complaint against Amazon for allegedly profiteering from the public health crisis by charging excessive prices.
In the complaint, Oakland resident Mary McQueen and Selma resident Victoria Ballinger allege that Amazon itself, as well as third-party sellers, violated California law by hiking prices during the COVID-19 pandemic.
“As the COVID-19 crisis has escalated, so too have Amazon’s prices for the goods consumers require to remain healthy, protected, and nourished,” McQueen and Ballinger allege in papers filed Tuesday in U.S. District Court for the Southern District of California.
After California Governor Gavin Newsom declared a state of emergency on March 4, prices of some products on Amazon -- including face masks and cold remedies -- skyrocketed by more than 500%, according to their complaint.
California's price-gouging law generally restricts companies' ability to raise prices by more than 10% after the declaration of a state of emergency.
Ballinger and McQueen assert that they both experienced price hikes after Newsom declared a state of emergency. Ballinger alleges that on March 13, she purchased a Mary Kay facial cleaner from a third-party seller on Amazon for $14.47 -- which reflected a markup of more than 50% from before the crisis.
McQueen says she purchased a hair removal kit directly from Amazon for $6.74 on March 23 -- reflecting a markup of around 40%.
"Amazon’s position as a vital seller in times of contagion does not place it above the law," the complaint states. "If anything, the increased demand for its platform makes price gouging by Amazon all the more unconscionable."
The complaint characterizes Amazon as the “functional seller” of goods offered through the platform by third parties.
But in contexts other than price-gouging, judges have struggled to determine whether Amazon is a “seller” when its platform is used by outside retailers, or merely an agent of those other retailers.
Last year, a federal appellate panel of the 3rd Circuit Court of Appeals ruled 2-1 that Amazon itself was the “seller” of a defective product that injured the purchaser.
But the 3rd Circuit later vacated that decision and ordered a new hearing. The judges haven't yet announced a decision in that matter.
In addition to the new lawsuit, Amazon's prices have also come under fire on Capitol Hill. Last month, Sen. Ed Markey (D-Massachusetts) questioned the company over reports of high markups on its site.
An Amazon spokesperson said at the time that the company had blocked or removed “tens of thousands” of offers by third parties, and continues to monitor the platform.
Amazon generally allows third-party sellers who use the company's marketplace platform to set their own prices. But the company also has “fair pricing” policies that prohibit sellers from taking advantage of emergencies like the coronavirus pandemic.
“If we see pricing practices on a marketplace offer that harms customer trust, Amazon can remove the Buy Box, remove the offer, suspend the ship option, or, in serious or repeated cases, suspending or terminating selling privileges,” Amazon says in a section of its site outlining the policy.
Late last month, the company said in a blog post it has a "dedicated team" that identifies "unfairly priced products that are now in high demand, such as protective masks and hand sanitizer."
"If we find a price that violates our policy, we remove the offer and take swift action against bad actors engaged in demonstrated misconduct, including suspending or terminating their selling accounts and referring them to law enforcement agencies for prosecution under relevant laws," the company wrote.