In the early days of the pandemic, COVID-19 was synonymous with a mad dash for anti-virus home items like hand sanitizer, toilet paper, and anti-bacterial wipes. Amazon emerged from the shopping frenzy as key source of these products and hosts of others. Even as many states are lifting states of emergency, businesses active during the pandemic, such as Amazon, are facing suits for conduct during the pandemic. 

On July 2, 2021, a group of consumers filed a proposed class action complaint in Washington federal court against Amazon alleging “unlawful price gouging during the COVID-19 pandemic.” The plaintiffs bring three counts against the e-commerce giant: (1) violation of the Washington Consumer Protection Act (“WCPA”); (2) negligence; and (3) unjust enrichment.

Plaintiffs highlight that Amazon’s sales have increased more than 1,000 percent since the beginning of the pandemic and describe price increases on a range of products. Specifically, plaintiffs allege that Amazon unlawfully raised prices on face masks, cold remedies, toilet paper, pain reliever, black beans, baking soda, flour, yeast, and disinfectant wipes.

The plaintiffs paint a picture of prices increasing by between 233% and 1,800% since the U.S. Department of Health and human Services declared a public health emergency related to COVID-19. Plaintiffs allege that Amazon is responsible not only for increased prices on Amazon branded or owned produces, but also for products sold by third-parties on its platform. Plaintiffs cite several instances where Amazon branded products were sold well above the pre-pandemic price.

Additionally, early in the pandemic Amazon acknowledge that price increases were occurring on its platform and committed to removing third-party sellers who engaged in price gouging. Plaintiffs have alleged that such independent, third-party activity can be imputed to Amazon, and rest their case on Amazon’s policies—including “Sold by Amazon,” the “Minimum Gross Proceeds” price, and “Automated Pricing” services—for third-party sellers.  With these policies, the Plaintiffs allege, Amazon is “[f]ar from serving as a passive intermediary,” but instead the company “controls the sale and marketing of all third-party products on its platform.” Plaintiffs also point to Amazon’s ability to set prices, set price ceilings, and “retains the ultimate right to reject a price.”

Unlike many U.S. states, Washington does not have an explicit price gouging statute. Plaintiffs, therefore argue that the WCPA, which prohibits “unfair or deceptive acts or [trade] practices,” effectively includes a price gouging prohibition. Plaintiffs acknowledge that there is no explicit percentage cap on price increases.  Instead Plaintiffs ask the court to adopt a rule which establishes that 15% price increase during an emergency constitutes an unfair trade practice in violation of the WCPA. Plaintiffs also point to the fact that Washington Attorney General Bob Ferguson throughout the pandemic has invoked the WCPA to issue numerous cease-and-desist letters barring price gouging.

Amazon is continuing its investigation into the allegations in the complaint and the parties recently agreed to extend the deadlines to respond to the complaint.  As Amazon litigates this case in Washington, related business should prepare for possible claims from consumers.

*      *      *

Visit Proskauer on Price Gouging for antitrust insights on COVID-19.

*      *      *

Proskauer’s cross-disciplinary, cross-jurisdictional Coronavirus Response Team is focused on supporting and addressing client concerns. Visit our Coronavirus Resource Center for guidance on risk management measures, practical steps businesses can take and resources to help manage ongoing operations.

Photo of Christopher E. Ondeck Christopher E. Ondeck

Chris Ondeck is co-chair of the Firm’s nationwide Antitrust Group. He represents clients in civil and criminal antitrust litigation, defending mergers and acquisitions before the U.S. antitrust agencies, defending companies involved in government investigations, and providing antitrust counseling.

Chris has handled antitrust matters…

Chris Ondeck is co-chair of the Firm’s nationwide Antitrust Group. He represents clients in civil and criminal antitrust litigation, defending mergers and acquisitions before the U.S. antitrust agencies, defending companies involved in government investigations, and providing antitrust counseling.

Chris has handled antitrust matters for clients in a number of industries, including advertising, aerospace, alcoholic beverages, appliances, building materials, consumer products, defense, franchise, medical devices, metals, mining, natural resources, oil and gas, packaging, pharmaceuticals, software and telecommunications. He also has developed substantial experience advising clients regarding the application of the antitrust laws to the pharmaceutical industry, the agriculture industry, trade associations and the energy industry.

Photo of John R. Ingrassia John R. Ingrassia

When competition or antitrust questions arise, John Ingrassia is sought out for his knowledge, reputation and credentials.

John is a recognized authority on Hart-Scott-Rodino antitrust merger review, and for more than 20 years has counselled businesses facing the most challenging antitrust issues and…

When competition or antitrust questions arise, John Ingrassia is sought out for his knowledge, reputation and credentials.

John is a recognized authority on Hart-Scott-Rodino antitrust merger review, and for more than 20 years has counselled businesses facing the most challenging antitrust issues and helped them stay out of the crosshairs — whether its distribution, pricing, channel management, mergers, acquisitions or joint ventures.

John is a senior counsel at the Firm, advising on the full range of antitrust matters in diverse industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services and health care, among others.  His practice focuses on the analysis and resolution of antitrust issues related to mergers, acquisitions, and joint ventures, and the analysis and assessment of pre-merger notification requirements. John has extensive experience with the legal, practical, and technical requirements of merger clearance and is regularly invited to participate in Federal Trade Commission and bar association meetings regarding Hart-Scott-Rodino practice issues.

Photo of Shannon D. McGowan Shannon D. McGowan

Shannon McGowan earned her J.D. from the University of Virginia School of Law, where she captained the school’s Philip C. Jessup International Law Moot Court team.

Prior to law school, Shannon served as a legislative assistant to state representatives at the Oklahoma State…

Shannon McGowan earned her J.D. from the University of Virginia School of Law, where she captained the school’s Philip C. Jessup International Law Moot Court team.

Prior to law school, Shannon served as a legislative assistant to state representatives at the Oklahoma State House of Representatives.