Health pandemic leads to numerous reports of price gouging across NC

Health pandemic leads to numerous reports of price gouging across NC

Photos of alleged price gouging were submitted by consumers to the North Carolina Attorney General’s Office.

Just three days after Gov. Roy Cooper declared a state of emergency in response to the COVID-19 pandemic, Joannie Valencia paid $42.90 for two bottles of 70% isopropyl alcohol at a mom and pop pharmacy in Charlotte.

She was in a panic. She had kids at home and had driven all over the city looking for any kind of disinfectants to keep her family safe, but her search had been futile.

She knew the price was high, but she paid it. When in stock, the same 32-ounce bottles of rubbing alcohol cost $1.99 a piece at Target and $2.39 at CVS.

“I was one of those victims you read about,” Valencia said in a recent phone interview. “It was stupid for me, but I really needed it, and I couldn’t find it anywhere.”

When she found out the office of North Carolina Attorney General Josh Stein was cracking down on price gouging – the illegal practice of charging excessive prices for goods and services during an emergency – she knew she needed to report it, but she felt bad.

Valencia called the store owner at A2Z Health Mart Pharmacy on Archdale Drive and tried get a return on the difference in price for what the items should have cost. Ragni Gandhi, the owner, offered her a full refund if she would return the alcohol to the store, saying she would take the product back, as she couldn’t find any more to sell.

Valencia declined and submitted her bank statement to Stein’s office as part of a price gouging report.

“It was just taking advantage in a situation like this,” she said. “If she got me, how many other people did she get?”

Gandhi, reached by phone Thursday, saw the situation differently. Her supplier had charged her $10 per bottle for that rubbing alcohol, she said, so she marked up the price. She said all the supply chains for items like alcohol or face masks are charging businesses more because of high demand.

“Right now, we don’t have anything in stock,” she said.

The business has closed this week because of the virus. When asked if she considered charging $20 for the alcohol to be price gouging, Gandhi said, “no.”

“I don’t do anything like that,” she said, adding that Valencia had begged her to sell the bottles in question.

Hundreds of reports statewide

The Attorney General’s office has received more than 400 reports of alleged price gouging since the state of emergency was declared March 10. Well over half of those reports allege excessive price increases on cleaning and paper products, groceries and hand sanitizer.

Policy Watch reviewed 220 of the reports, made available by Stein’s Office. Most of them had to do with toilet paper.

Photos of alleged price gouging were submitted by consumers to the North Carolina Attorney General’s Office.

Several reports with photos showed that a 12-pack of Angel Soft toilet paper was marked up to $19.99 at Atlantic Farmers Market on Eastway Drive in Charlotte. When in stock, the same pack ranges from $6 to $10 online.

An employee at the store reached by phone Thursday denied selling it for that much. He refused to give his name and refused to put the owner on the phone or pass along a message.

“We’re not price gouging,” he said. “But people have their own opinions.”

Several other photos from reports to Stein’s office showed Target advertising an 24-pack of Charmin toilet paper for $29.99. It usually costs $23.99 at the store, according to the Target website. Target did not return a request for comment.

There were some reports that also accused Walmart of increasing prices on items like hand sanitizer and Lysol wipes. In lieu of a comment, the company provided a letter it sent to all attorneys general last week.

“One critical issue we have addressed, and continue to monitor in real time, is suspected price gouging,” the letter states. “Walmart’s business model is Everyday Low Prices, Everyday Low Cost and we work hard to provide our customers with great prices. The prices we set are first and foremost based on our cost of goods and if you shop with us much, you will notice that they traditionally don’t vary significantly day over day, month over month.”

The letter discusses several issues regarding the pandemic that Walmart said it “presumed” to be at the “top of mind” of attorneys general, their staffs and constituents. In addition to price gouging, it addresses monitoring product claims and the sanitizing of stores. The correspondence said it was not designed, however, to be a complete narrative of the “countless” efforts the company is making for people during the pandemic.

Walmart, like several other companies with online retail platforms – Amazon, eBay, Facebook – says it is battling third-party price gouging, which also made up a large part of reports.

One report to Stein’s office detailed an online eBay bid for a single roll of toilet paper that closed at $50,000. Other reports from exhausted and desperate consumers reported excessive Amazon pricing for hand sanitizer, Clorox wipes and other cleaning products.

Spokespeople from both Amazon and eBay reported that their companies are cracking down on the problem and working with attorneys general from many states.

“Like so many companies, we have been closely monitoring the coronavirus pandemic as it continues to develop,” said Ashley Settle of eBay corporate communications. “As always, our first priority is to ensure the safety of our employees and customers around the world. eBay is taking significant measures to block or quickly remove items on our marketplace that make false health claims. We are making every effort to ensure that anyone who sells on our platform follows local laws and eBay policies.”

Similarly, Maxine Tagay of Amazon corporate communications reported that the retail giant is closely monitoring third-party sellers. She said the company has removed over a half million listings for price gouging and has taken action regarding more than 3,900 sellers.

Tagay also linked to a blog post for consumers about how Amazon is addressing price gouging.

Laura Brewer, a spokesperson for Stein, said in an email this week that the office has been issuing investigative subpoenas and other formal written inquiries to several businesses based on the reports they are receiving about price gouging.

“We also are in active communication with online platforms such as Amazon, Facebook and eBay about sellers abusing those platforms,” she stated.

Brewer said the difference between price gouging and a justifiable price increase at a business is not always clear to the public. Because of that, she urged anyone who thinks they may see price gouging to contact the the Attorney General’s office so that staff can review the claim and reach out to the business.

She said that a justifiable price increase depends on many factors, including the nature of the item being sold, actual increases in supply chain costs due to overtime pay, additional shipping charges, prices of raw materials, and other industry-specific circumstances.

“For example, if a store is paying overnight shipping to get toilet paper or hand sanitizer to sell to customers, it’s appropriate for the store to charge extra to recoup the extra shipping costs it incurred,” she said.

From surgical masks to chicken breasts

It’s not just individuals who are feeling the effects of price increases on necessities. Healthcare providers, which are experiencing a shortage of medical supplies, are being hit hard, too.

A Duke University employee tasked with procuring CDC-approved N95 and surgical masks and hand sanitizer reported a New Jersey corporation with locations in Morrisville and Charlotte, Stephen Gould, for marking the cost of masks up by 1,650%.

The employee stated in the report that masks when acquired through the normal healthcare supply chain channel cost $17 for a box of 35, and that that price at one company hasn’t changed. Stephen Gould, in contrast, had quoted a price of $297.50 for a box of the same 35 masks.

“Their pricing appears to be usurious,” the Duke employee stated in the report.

She also supplied Stein’s office with email exchanges from other Duke employees about ordering masks and a letter with the official quote from Stephen Gould. The company, which reports on its website to be the “largest independent custom product and packaging solutions provider in the United States,” did not return a request for comment.

Attorney General Josh Stein

Price gouging has long been an issue during times of emergency in North Carolina and across the nation. After Hurricanes Michael and Florence devastated North Carolina in 2018, Stein’s office brought seven lawsuits against 22 defendants under the state’s price gouging statute.

Ultimately, the office obtained eight judgments against 17 defendants, including a $274,000 settlement that was one of the largest price gouging settlements in the department’s history, according to a news release.

Earl Cleveland, of Fayetteville, is hoping Stein is able to stem some of the price gouging he’s seen go on in his area. He made reports about his neighborhood butcher raising the cost of chicken breast (from $1.99 per pound to $4.25 per pound) and hamburger meat (from $2.43 per pound to $3.09 per pound).

“With prices going up, I’m worried about being able to feed my family,” he said in a phone interview.

He lost his job in the past week and said he has three kids and a fiancée who is eight months pregnant. He said he had sticker shock when he saw the price of the meat, which he bought two weeks earlier at the lower cost.

“It really hit me hard,” he said. “This is a family-owned company that’s supposed to be looking after its customers. But it happens all the time around here.”

The Raeford store could not be reached for comment, so Policy Watch is withholding the name of the business.

“I understand we live in a capitalist country, but to make money at the sacrifice of other people, who might not be able to feed their family? That’s ridiculous.” Cleveland said. “It’s just like back during Hurricane Matthew, when water was $20 for a case. Does that water have gold in it? How are you supposed to pay that?”

Cleveland said he was thankful that, for the moment, a local church has been able to help his family with food, but he’s not sure how they will keep going, especially during an economic downturn from the COVID-19 pandemic.

Residents can report potential price gouging to the North Carolina Attorney General’s Office by calling 1-877-5-NO-SCAM or by filing a complaint online.

[Note: This post has been updated to correct a price reference for toilet paper at Target.]