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Price Gouging Defense Update: State and Federal Authorities are Aggressively Targeting Price Gougers During the Novel Coronavirus (COVID-19) Pandemic

price gouging defense

The U.S. Department of Justice (DOJ) and Attorney General’s Offices around the country have announced that they will be aggressively targeting companies that attempt to price gouge healthcare providers and consumers during the COVID-19 outbreak.

The novel coronavirus (COVID-19) pandemic continues to have unprecedented effects on our nation’s economy; and, now that President Trump has extended the federal social distancing recommendations through April 30, healthcare providers and consumers are likely to face even greater challenges when it comes to finding the supplies they need in order to play their respective roles in helping the nation move forward. With this concern in mind, the U.S. Department of Justice (DOJ) and state AG’s Offices around the country have announced that they intend to aggressively prosecute entities suspected of price gouging during the pandemic, making the need for the best price gouging defense lawyers more crucial than ever.

Our defense lawyers have seen the effects of these efforts already.

Companies of all sizes across the country are being targeted with civil investigative demands (CIDs) issued by state and federal authorities. These CIDs present significant risks for the entities being targeted; and, although these inquiries are civil in nature, there is a significant risk for criminal prosecution. Price gouging can be prosecuted as a felony offense at the state and federal levels; and, during the novel coronavirus pandemic, individuals who are responsible for driving up prices on medical supplies and basic necessities will be at articular risk for facing criminal charges.

White House Issues Executive Order Preventing Hoarding, DOJ Responds with Creation of COVID-19 Hoarding and Price Gouging Task Force

In advance of extending the federal social distancing guidelines through April 30, President Trump issued an Executive Order intended to prevent hoarding during the novel coronavirus (COVID-19) pandemic. In pertinent part, the Executive Order states:

“I am delegating to the Secretary [of Health and Human Services] my authority under section 102 of the [Defense Production] Act (50 U.S.C. 4512) to prevent hoarding of health and medical resources necessary to respond to the spread of COVID-19 within the United States. I am also delegating to the Secretary my authority under the [Defense Production] Act to implement any restrictions on hoarding, including my authority under section 705 of the Act (50 U.S.C. 4555) to gather information, such as information about how supplies of such resources are distributed throughout the Nation.”

In response to the issuance of this Executive Order, Attorney General William Barr issued an internal DOJ memorandum which announced the creation of a COVID-19 Hoarding and Price Gouging Task Force. In the memorandum, Attorney General Barr writes:

“[T]he President gave us another tool to fight misconduct by issuing an Executive Order pursuant to section 102 of the Defense Production Act, which prohibits hoarding of designated items. The order authorizes the Secretary of Health and Human Services (‘HHS’) to protect scarce healthcare and medical items by designating particular items as protected under the statute. Once an item is designated, the statute makes it a crime for any person to accumulate that item either (1) in excess of his or her reasonable needs or (2) for the purpose of selling it in excess of prevailing market prices. See 50 U.S.C. §§ 4512, 4513. We will work closely with the HHS Secretary as he designates scarce items.”

The memorandum goes on to state that the COVID-19 Hoarding and Price Gouging Task Force will, “coordinate nationwide investigation and prosecution of these illicit activities,” (i.e. price gouging for medical supplies and other necessary items), and that, “[e]ach United States Attorney’s Office, as well as relevant Department components, are directed to designate an experienced attorney to serve as a member of the task force.”

These efforts follow the DOJ’s issuance of a press release on March 9 in which AG Barr is quoted as stating, “The Department of Justice stands ready to make sure that bad actors do not take advantage of emergency response efforts, healthcare providers, or the American people during this crucial time. . . . I am committed to ensuring that the department’s resources are available to combat any wrongdoing and protect the public.” The press release goes on to state that the DOJ intends to criminally prosecute companies that fix prices for necessary supplies as well as competitors that collude to fraudulently inflate the market prices for critical public health products.

State Attorneys General Send Letters to Amazon, Facebook, eBay, Walmart, and Craigslist Demanding Assistance in Fight Against Consumer Price Gouging

In addition to these efforts at the federal level, state Attorneys General are working together to target entities suspected of price gouging as well. In a series of letters issued on March 25 to the CEOs of Amazon, Facebook, eBay, Walmart, and Craigslist, the Attorneys General of 33 states asked for these companies’ assistance in fighting price gouging during the COVID-19 outbreak. According to the letters, state Attorneys General are receiving daily complaints of alleged price gouging online and in brick-and-mortar locations, including allegations targeting marketplace sellers and these companies themselves.

In the letters, the Attorneys General ask these companies to assist in their fight against price gouging by:

  • “[C]reating and enforcing strong policies that prevent sellers from deviating in any significant way from the price the product was sold at prior to the onset of the emergency . . . that comply with . . . states’ laws and regulations.”
  • “Trigger[ing] price gouging protections independent of, or prior to an emergency declaration . . . [since p]rice gouging on a platform often beings prior to official emergency declarations.”
  • “Creat[ing] . . . a ‘Fair Pricing’ Page/Portal where consumers can report price gouging incidents . . . [including] the name of the vendor, the item for sale, the alleged unfair price, and the state of residence of the complainant . . . .”

The letters conclude by noting that the state Attorneys General, “will continue to monitor, investigate, and prosecute sellers who engage in price gouging,” during the novel coronavirus (COVID-19) pandemic.

State and Federal Laws Prohibit Price Gouging During National Emergencies, Including the COVID-19 Outbreak

While Congress has tried and failed on multiple occasions to pass a federal anti-price-gouging law, there are still various sources of legal authority that state and federal prosecutors can use to target companies that inflate their prices during the novel coronavirus (COVID-19) pandemic.

Approximately 30 states have price gouging laws in effect, and others are reportedly in the process of enacting legislation specifically in response to the COVID-19 outbreak. Additionally, as noted in Attorney General Barr’s memorandum, the President’s Executive Order gives the DOJ the power to prosecute price gouging cases at the federal level, and it is possible that HHS, the Federal Trade Commission (FTC), and other agencies could all utilize statutes that are not specific to price gouging (i.e. the federal prohibition on unfair trade practices) to target violators. In states where there is no price gouging law in effect, many Attorneys General have indicated that they intend to investigate complaints under other sources of statutory authority as well.

Price gouging laws at the state level vary significantly, though most trigger scrutiny when prices are raised by 10 to 25 percent. Penalties range from $1,000 fines for each individual offense to prison time for criminal violations.

Our Price Gouging Defense Lawyers are Representing Individuals and Companies Facing Price Gouging Allegations During the Novel Coronavirus (COVID-19) Pandemic

Instances of alleged price gouging tend not to be as straightforward as they seem. If you or your company has been accused of price gouging during the novel coronavirus (COVID-19) pandemic, it is important that you engage experienced price gouging defense lawyers to fight the allegations. At Oberheiden P.C., we are actively representing clients facing online price gouging allegations, and our team of senior defense lawyers and former federal agents is available to represent clients as price gouging lawyers on a nationwide scale.

As indicated above, many of these COVID-19 related investigations are beginning with the issuance of CIDs. Responding to a state or federal CID is a sensitive matter, and the substance of an individual’s or company’s response can have significant ramifications for subsequent stages of the government’s investigation. If you have received a CID, our attorneys can respond to the CID on your behalf, and we can also communicate with the issuing authority to begin working toward a favorable result.

Regardless of the veracity of the allegations you or your company is facing, they cannot be ignored. Especially in times such as these when particular allegations are receiving enhanced attention from state and federal authorities, individuals and companies need to defend themselves effectively. Our team of career defense attorneys, former federal prosecutors, and former law enforcement agents is here to protect you, and we encourage you to contact us promptly for a free and confidential case assessment.

Speak with a Price Gouging Defense Lawyer at Oberheiden P.C. for any Charges or Allegations of Price Gouging

If you have received a civil investigative demand (CID) in relation to a state or federal price gouging investigation, it is imperative that you seek experienced price gouging defense counsel immediately. To speak with a senior member of our price gouging defense team in confidence, call 888-680-1745 or inquire online now.

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