EBay Price Gouging Lawsuit Calls Out Lockdown Price Increases

A California woman has filed an eBay price gouging lawsuit, alleging the online retail website supported sellers who asked for extraordinary amounts of money for high-demand products during the pandemic.

Plaintiff Jeanette Mercado is an Uber and Lyft driver who says she had to pay for N95 masks on eBay that were sold at a 300 percent markup. She said she needed the masks to help prevent her from catching COVID-19 from passengers riding in her vehicle.

According to Mercado’s eBay lawsuit, eBay didn’t attempt to keep sellers from charging prices that gouged buyers and “not only allows, but encourages” higher pricing.

A look at eBay’s coronavirus notice found May 20, 2020, included this verbiage:

“We have taken significant measures to block or quickly remove items that make false health claims or offer products at inflated prices in violation of applicable laws. As of April 2, we have removed or blocked more than five million listings.”

EBay goes on to say that health care masks such as N95/N100 and surgical masks, hand sanitizer/gel and disinfecting wipes are among the blocked items, and that restrictions exist on the listing of toilet paper, baby formula, diapers, baby wipes, tampons, Lysol disinfectant wipes, and Clorox bleach, all of which have been scarce on American store shelves for the last couple of months.

Allegations in eBay Price Gouging Lawsuit

EBay faces allegations that the company violated California’s Unfair Competition Law, Consumers Legal Remedies Act, and a California Civil Code that prohibits quasi-contract/restitution/unjust enrichment.

Even though eBay itself does not sell products, the online retail platform allows sellers to post products for sale. The company makes money by charging a final value fee that is a percentage of the total amount of the final sale price.

According to the eBay price gouging lawsuit, “… the higher the sale price, the more profit eBay stands to earn.”

The proposed class action lawsuit would represent eBay purchasers in California and throughout the U.S. who paid a minimum of 10 percent more for necessities after Feb. 3 than they did for the same types of items on Feb. 2 or before the buyer’s state declared a state of emergency due to the COVID-19 epidemic.

Statistics show that as of a year ago, more than 192 million eBay users, both buyers and sellers, exist around the world. Even though eBay exists in around 190 different parts of the world, the U.S. is the company’s biggest market with 70 percent of eBay’s traffic. In 2019, more than 1.3 billion listings were placed on eBay.

Even though the top-selling category in 2019 had been Electronics & Accessories, the coronavirus pandemic changed priorities for nearly all consumers worldwide.

In her lawsuit, Mercado said that on March 14, 2020, she bought a two-pack of N95 masks on eBay for $23.98 even though the retail prices at Home Depot and O’Reilly’s Auto Parts, among other national retailers, never went above $8.99. She said the eBay price amounted to an almost 300 percent markup.

According to Marketplace.org, a nonprofit news organization, eBay sellers who are selling toilet paper at inflated prices probably bought surplus amounts earlier this year and “are presumably profit-seeking scalpers…”

When stores dramatically increase the price of something in high demand during an emergency, we do call it “price gouging,” which the Marketplace explains leads to scalping in a secondary market such as eBay.

Homa Zarghamee, economics professor at Barnard College, told the Marketplace that when looking at what people are willing to pay for an item, income inequality must be considered as well. She said the “willingness to pay” a certain amount makes it sound as if we all start out with the exact same amount of money, which of course, is not so.

Zarhamee said, “…Somebody with much higher income will always be willing to pay more because they’re able to pay more.”

The eBay Price Gouging Lawsuit is Jeanette Mercado v. EBay, Inc., Case No. 5:20-cv-35053, in the U.S. District Court for the Northern District of California.

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This article is not legal advice. It is presented
for informational purposes only.