UPDATE: The TCA eBay COVID-19 Price-Gouging Investigation is now open! If you overpaid for COVID-related products online, submit your information here.
A California consumer claims eBay is encouraging its sellers to engage in price gouging on essential items during the COVID-19 pandemic.
According to the eBay class action lawsuit, Jeanette Mercado of Orange County, Calif., shopped online March 14 for N95 face masks to protect herself as an Uber and Lyft driver. She says she purchased a two-pack from the online auction site for a total of $23.98.
However, as the retail price listed for the same product was no more than $8.99 at national retailers such as Home Depot, the eBay price represented a markup of nearly 300 percent.
As “consumers are ordered to stay home and warned that venturing out into the public can be as dangerous as a game of Russian roulette,” and essential products ranging from diapers to disinfectants have become extremely difficult to find at local stores, many have turned by necessity to online purveyors, the eBay class action lawsuit states.
“Unscrupulous sellers opportunistically prey upon the public by gouging prices of essential items … to unconscionably profit off of vulnerable and fearful consumers during these unprecedented times,” the eBay class action lawsuit alleges. “Not only is such gross misconduct unfair and inhumane, it is a criminal offense.”
The eBay class action lawsuit notes the defendant is the world’s largest open marketplace, with 1.3 billion listings being auctioned at any given time. The California-based company’s platform has millions of transactions happening every day across more than 190 markets.
To discourage price gouging, California statute prohibits raising the price of certain consumer goods and services — such as medical supplies and goods used for emergency cleanup — by more than 10 percent within 30 days after an emergency has been declared, reports the eBay class action lawsuit.
By that measure, price protections for eBay were first triggered Feb. 3, when Santa Clara County declared California’s first state of emergency related to COVID-19, the eBay class action lawsuit argues. “From that point forward, price increases anywhere in California exceeding the 10% statutory threshold were presumptively unlawful.”
On March 4, California Gov. Gavin Newsom declared a statewide state of emergency. The federal government then declared a national state of emergency on March 13.
While the California law provides for a period of 30 days after each declared emergency, the eBay class action lawsuit notes, the governor extended the state’s price-gouging prohibition at least through Sept. 4.
Despite that legal restriction, the eBay class action lawsuit cites numerous examples taken from the website in April and May, including a three-pack of N95 masks for $585, a can of Lysol disinfectant for $45.49 and a 12-pack of toilet paper for $49.90.
The company has stated publicly that it has banned the auction of certain essential items to stop sellers from using its site to charge exorbitant rates.
It also has announced the addition of a tool for reporting price gouging on its website. However, the eBay class action lawsuit calls those measures “superficial and ineffective” and “deliberately pretextual.”
The eBay class action lawsuit maintains that “eBay’s very business model not only allows but encourages such price gouging, to eBay’s financial benefit: in addition to charging fees for initially listing items, eBay charges a ‘final value fee’ when items actually sell, which is calculated as a percentage of the total amount of the sale. Thus, the higher the sale price, the more profit eBay stands to earn.”
In addition, months after the first state of emergency was declared and eBay implemented its ban, a scan of the website revealed many examples of essential products being auctioned for “exorbitant and unconscionable prices,” the eBay class action lawsuit states.
“The upside for eBay in allowing this rampant price gouging on its platform is clear: eBay’s posted revenues since the beginning of the COVID-19 pandemic have surpassed all prior expectations,” argues the eBay class action lawsuit. “And eBay shares have added about 8.2% since the beginning of the year versus the S&P 500’s decline of –11.4%.”
The eBay class action lawsuit claims unjust enrichment as well as violations of California’s Unfair Competition Law and Consumer Legal Remedies Act.
Plaintiff is demanding a jury trial in hope of winning injunctive relief, restitution, court costs and “other appropriate equitable relief.”
Have you experienced price gouging during the coronavirus pandemic? Share your experience in the comment section below.
Plaintiff is represented by Alan Kang of AK Law ACPC and Adam M. Moskowitz, Howard M. Bushman and Joseph M. Kaye of The Moskowitz Law Firm PLLC, Jeffery Sonn of Sonn Law Group, Andrew Friedman and Francis Balint, Jr. of Bonnett Fairbourn Friedman & Balint PC.
The eBay Class Action Lawsuit is Jeanette Mercado v. eBay Inc., Case No. 5:20-cv-03053, in the U.S. District Court for the Northern District of California, San Jose Division.
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14 thoughts onCOVID-19 Price Gouging Alleged in eBay Class Action
add me-bought online
Add me eBay is price gouging now worse than 2020..I have been overcharged bad on certain items 119.00 for 12 rolls of toilet paper .I had to fight them to get a refund.
add me