Durbin Asks DOJ For Update On Price Gouging Activity During COVID-19 Pandemic

CHICAGO – U.S. Senator Dick Durbin (D-IL) today requested updated information about the current prevalence of COVID-19-related price-gouging activity and the steps that are being taken to address it from the U.S. Department of Justice (DOJ). In a letter to DOJ’s Hoarding and Price Gouging Task Force (Task Force) leader Craig Carpenito, Durbin requested more information on how the DOJ Task Force is working to investigate and prevent price-gouging involving personal protective equipment, medical supplies, sanitizer and cleaning products, household necessities, and more. Durbin also asked for information about the Task Force’s coordination with other federal, state, and local agencies, and about efforts to address profiteers who take advantage of the lack of transparency on online third-party marketplaces to avoid scrutiny and accountability.  

“This price gouging hurts consumers, families, businesses, and public entities who are scrambling to protect and sustain themselves in the face of this pandemic,” Durbin wrote.  “An effective strategy for combating price-gouging requires close coordination between federal, state, and local authorities as well as responsible cooperation from the online marketplaces that sellers often use for price-gouging schemes… I look forward to working with you to do all we can to combat price gouging during this pandemic.”

In March, Durbin and U.S. Senator Bill Cassidy, M.D. (R-LA) introduced legislation to deter the online sale of stolen, counterfeit, price-gouged, and dangerous consumer products by ensuring transparency of high-volume third-party sellers in online retail marketplaces.  The Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers (INFORM Consumers) Act would direct online retail marketplaces that host third-party sellers of consumer products to authenticate the identity of high-volume sellers and ensure that consumers can see basic identification and contact information for these sellers. The bill would also ensure that online marketplaces provide consumers with a mechanism for flagging suspicious marketplace activities, such as price-gouging, by high-volume third party sellers.

Full text of the letter is available here and below:

June 5, 2020

Dear U.S. Attorney Carpenito:

I write to you, in your capacity as leader of the Department of Justice’s COVID-19 Hoarding and Price Gouging Task Force (Task Force), to request updated information about the current prevalence of price-gouging activity and the steps that are being taken to address it. 

As our nation responds to the COVID-19 pandemic, there have been clear signs of a troubling increase in price-gouging activity.  In recent months, federal authorities and state Attorneys General have reported being inundated by complaints of price-gouging involving PPE, medical supplies, sanitizer and cleaning products, household necessities, and more.^[1]  This price-gouging hurts consumers, families, businesses, and public entities who are scrambling to protect and sustain themselves in the face of this pandemic. 

In response to these concerns, the Secretary of the U.S. Department of Health and Human Services has designated certain medical and protective items as scarce or threatened materials under the Defense Production Act, thereby making it a federal offense for any person to hoard or price-gouge those products.  On March 24, 2020, the Department of Justice established the Task Force under your leadership to investigate and prosecute those who amass these products in excess of reasonable needs or for the purpose of selling the products at excess prices.

An effective strategy for combating price-gouging requires close coordination between federal, state, and local authorities as well as responsible cooperation from the online marketplaces that sellers often use for price-gouging schemes.  I understand that the Task Force has designated at least one attorney from each U.S. Attorney’s Office to participate in Task Force activities, and I understand that U.S. Attorneys’ Offices in my state of Illinois are working productively with state and local counterparts to share information and coordinate investigations. 

I am also aware that profiteers often take advantage of the lack of transparency on online third-party marketplaces to avoid scrutiny and accountability and to create new accounts as quickly as previous accounts are shut down.  I have joined with colleagues to introduce the INFORM Consumers Act, bipartisan federal legislation that would help ensure greater transparency of high-volume sellers on these marketplaces and help shine a light on suspicious sales practices and deter them, and I am interested in learning more about the Task Force’s experiences with third-party online marketplaces.

Your Task Force has been directed to develop effective enforcement measures and best practices for combating price-gouging, and to coordinate the nationwide investigation and prosecution of this illicit activity.  I hope to assist in those efforts.  To help advance the goals of combating price-gouging both nationally and in my home state, I request that the Task Force provide answers to the following questions:

1. Since the creation of the Task Force, how many price-gouging complaints have been submitted to federal, state, and local authorities working in coordination with the Task Force, both nationally and in Illinois?  Are these numbers currently trending up or down?

1. Please break down the allocation of price-gouging complaints that are received by federal, state, and local authorities working with the Task Force, to the extent the Task Force is aware.  What mechanisms seem to be working most effectively for consumers to submit complaints of price-gouging to authorities?

1. Since the creation of the Task Force, how many price-gouging investigations have been opened by the Task Force and by state/local authorities working in coordination with the Task Force, both nationally and in Illinois? Are these numbers currently trending up or down?  What percentage of these investigations are led at the federal level versus the state or local level?

1. Since the creation of the Task Force, how many price-gouging enforcement actions have been conducted by the Task Force or by state/local authorities working in coordination with the Task Force, both nationally and in Illinois?  Are these numbers currently trending up or down? What percentage of these enforcement actions are led at the federal level versus the state or local level?

1. What types of products are currently subject to the largest number of complaints regarding price-gouging, and for what products would the Task Force recommend that consumers be on highest alert for potential price-gouging activity?

1. Please discuss the extent of coordination between the Task Force and the Federal Trade Commission in investigating price-gouging complaints and taking corrective action.

1. Please discuss the extent of coordination between the Task Force and state Attorneys General in investigating price-gouging complaints and taking corrective actions.  In the Task Force’s view, do state Attorneys General currently have sufficient manpower, technology, training, and resources to handle the volume of price-gouging matters that are arising during the COVID-19 pandemic, or would state Attorneys General benefit from additional resources dedicated to addressing price-gouging and related practices?

1. In the Task Force’s view, are private online marketplaces that host third-party sellers currently providing optimal levels of transparency and cooperation in combating price-gouging on their platforms, or would further transparency be beneficial?

1. Has the Task Force developed and disseminated best practices for coordinating and combating price-gouging within states?  If so, please discuss these best practices.

1. In the Task Force’s view, what further authorities, resources, or steps would be beneficial in the effort to combat price-gouging?

Thank you for your consideration of these requests for information.  I request a response by July 3, 2020.  I look forward to working with you to do all we can to combat price-gouging during this pandemic.

Sincerely,

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