Terry H. Schwadron
April 13, 2020
Coronavirus is bringing about a related outbreak of greed.
While federal, state and local policing agencies, already burdened with support of medical emergencies, say they are being aggressive, it is difficult to determine just how effective they are about keeping up with an endless array of price-gouging efforts, out-and-out frauds and, of course, the corporate response to increased competition among states and markets to meet virus-related needs.
Typically, attorney generals from the 41 states with programs in place to enforce price-gouging laws generally are responding to complaints, of which there is a flood. An Associated Press survey of attorneys general or consumer protection agencies nationwide found reports already exceeded 5,000, with hundreds more arriving daily.
Complaints from individuals or groups of a specific outrage seems to be drawing pretty good attention from law enforcement.
But the authorities are less able or less willing to look at the market-driven rises in prices or profiteering on items like hand sanitizer, disinfectant wipes and masks that have been in high demand and selling out or unusual price increases on everyday grocery items like eggs, chicken, rice and milk.
Those law enforcement efforts getting attention have been most focused on pricing for short-supply medical equipment like hospital gowns and ventilators.
The FBI formed a COVID-19 Hoarding and Price Gouging Task force which raided one Florida address last week and seized 192,000 N95 respirator masks, 600,000 medical grade gloves, 130,000 surgical masks and other materiel. I was a little surprised to read that rather than throwing the owner in jail, the FBI turned the masks over to the Department of Health and Human Services, which, in turn sent them to New York and New Jersey for use in hospitals. HHS said the owner would be paid a “fair market value” for the masks.
By contrast, the Federal Trade Administration seems to be doing little about price gouging.
In other words, we have tough talk right now, but we may have variably tough law enforcement in the name of emergency.
In states like Michigan, Massachusetts and Wisconsin, teams of agents working for the attorneys general have reported being inundated by thousands of potentially illegal price increases — far more than in previous weather emergencies, for example.
In those 41 states, activation of emergency declarations by governors have triggered these enforcement teams to go after prices rising more than, say, 20 percent, or those not adjudged as “reasonable.”
More than 30 attorneys general, for example, got Amazon to eliminate selected third-party provider listings whose goods rose substantially in price, and they have engaged with Facebook, Amazon, Craigslist, eBay and Walmart urging them to crack down on price gouging. The attorneys general argued that it was “especially important” that “unscrupulous sellers do not take advantage of Americans by selling products at unconscionable prices” during the coronavirus pandemic.
Indeed, to give a sense of scale of greed, Amazon said it had removed more than half a million listings for price gouging and had suspended 3,900 sellers.
U.S. Atty. Gen. William P. Barr joined the president at the daily coronavirus briefings last week to say he had directed federal prosecutors to prioritize fraud schemes related to the pandemic and to prosecute offenders. “If you are sitting on a warehouse full of surgical masks, you will be hearing a knock on your door,” said Barr. “The pandemic is dangerous enough without wrongdoers seeking to profit from public panic and this sort of conduct cannot be tolerated.”
Still, there is more talk about enforcement than numbers to show how the campaign is going.
Among local enforcement, New York City officials said it had issued 550 violations and $275,000 in fines to retailers accused of price gouging, Wisconsin said it had sent cease-and-desist letters to 16 businesses suspected of illegally raising prices on N95 masks as well as basic food items, and Kentucky Atty. Gen. Daniel Cameron said he was responding to 1,500 complaints.
FBI agents who showed up to arrest a Brooklyn man on charges of price gouging for masks and medical supplies coughed in the direction of nearby agents and said he had the virus. Nevertheless, he faces charges of assaulting a federal officer and with making false statements to law enforcement, up to $350,000 in fines and up to five years in prison.
There are tons of greed incidents in news reports, what with bottles of hand sanitizer charging $50, or re-stickered goods at double the price. Those are easy to report and relatively easy for law enforcement to track down.
But it is the corporate world where there is the most greed, and the least formal response. Who is responsible for tripled egg prices or the threat of health insurance rates being jacked up by upwards of 40 percent, according to a new analysis by an industry group?
Where is the government enforcement to keep the General Motors emergency efforts at building ventilators to keep the prices as low as possible; indeed, the federal policy of making states compete in the marketplace is forcing a price increase.
Where is the government intervention in the various financial markets, which use the tiniest excuse as well as perceived warnings to the economy to drop hundreds of points in a day and throw millions out of work to protect their company profits?
The FBI, at least, seems to have a down-to-earth attitude about Greed. It exists and grows as emergencies mask their efforts. Its consumer alerts warn about scammers after money, personal information or fraudulent payments. The FBI warns specifically about fake emails claiming to be from the Centers for Disease Control and Prevention (CDC) or other organizations claiming to offer information on the virus or those asking to verify your personal information in order to receive an economic stimulus check from the government.
Of course, bailouts to corporate industries are looked at quite differently from the guy who doubles the price of hand-sanitizer, reflecting a much deeper question about exactly whom we find to be greedy in our society.