Amazon, Walmart and others battle price gouging on coronavirus-related products

Amazon  Walmart

  • Amazon, eBay, Walmart and Etsy have all struggled to curb price gouging and products that make unverified claims about the coronavirus.
  • CNBC found several examples of face masks and “survival kits” that made dubious claims about their ability to help prevent the spread of the coronavirus.
  • Third-party sellers continue to gouge prices of hand sanitizers, face masks, hazmat suits and other products.

With many products sold out in stores, shoppers are racing to online retailers to order face masks, hand sanitizer, hazmat suits and other items to protect against the coronavirus.

The surge in demand has created an opening for third-party sellers on various e-commerce sites like Amazon and eBay to offer products that are otherwise sold out at traditional retailers. But in doing so, some merchants have flooded online marketplaces with overpriced goods and items that make dubious medical marketing claims. CNBC found products like face masks with markups as high as 582%.

Meanwhile, online retailers are playing a game of whack-a-mole to remove listings making misleading claims about the coronavirus or overcharging for products that have spiked in demand. Amazon, for example, said last week that it removed more than 1 million products for violating its policies related to price gouging and coronavirus claims. But plenty of listings still show up across various online shopping sites.

Shoppers are stocking up in-store and online as the coronavirus continues to spread. As of Tuesday, there were more than 91,300 confirmed cases of the coronavirus worldwide, with at least 3,110 deaths. There are at least 91 confirmed or presumptive positive cases of the coronavirus in the U.S, and at least six deaths

Amazon, Walmart, eBay and Etsy are among the online platforms that have been hit with price gouging or misleading medical products. All of the companies say that this activity isn’t allowed on their platforms and that they’ve removed listings or suspended sellers that violate their policies. But CNBC was able to find examples of products that appeared to flout these rules, illustrating that the problem still persists.

Last week, the U.S. Food and Drug Administration said it was monitoring the market for any products that make fraudulent coronavirus prevention and treatment claims. The agency said it would issue “warning letters, seizures or injunctions against products on the market that are not in compliance with the law.”

Misleading face masks and ‘epidemic survival kits’

Consumers have snapped up surgical masks out of fear of catching the coronavirus, even though the Centers for Disease Control and Prevention does not currently recommend people who are well wear a mask. Third-party sellers on several platforms have exploited this fear by incorrectly marketing face masks with specific keywords such as “coronavirus face mask” or “N95 face mask,” referring to a specific type of respirator that keeps out small airborne particles.

Rocio Zamora, an Amazon Prime member, experienced this firsthand. Earlier this month, Zamora purchased a box of 10 3M N95 masks from a third-party seller, so that she could protect herself from germs while visiting her sick son in the hospital, she told CNBC. The masks cost about $20, but the seller charged Zamora $100 to ship the item via standard delivery from Houston to her New York City-area residence.

When the item arrived, she opened the box and discovered the masks weren’t N95 respirators, but masks “used for construction,” Zamora said. She returned the masks but Amazon wasn’t able to issue her a refund. Amazon has since taken down the listing and told Zamora it would investigate why the seller charged her $100 for shipping. The seller, Spoon n Fork, didn’t immediately respond to a request for comment.

Last week, Amazon said it took down more than 1 million products from its third-party marketplace for making unverified claims about the coronavirus. The marketplace, which accounts for more than half of the company’s retail volume, is made up of millions of third-party merchants who offer products, new and used, from all over the world that they purchase from official distributors, flea markets and clearance aisles.

Amazon also sent out a notice to European sellers warning against mentioning the terms “Covid-19” and “Coronavirus” in their listings, according to a document obtained by CNBC. “In this situation, we invite you to behave in good faith and to keep customers’ trust, as well as to comply with the Business Solutions agreement and Amazon policies,” the notice states

Earlier this month, CNBC found several examples of third-party sellers offering products that claimed to “kill” the coronavirus, which were later flagged by Amazon’s algorithms. Many of the products were not certified to kill the strain of coronavirus that’s currently spreading, but could protect against other strains of the virus. After the sellers removed the claims, some of their listings were reinstated.

Jed Nelsen, a senior compliance manager at etailz, which helps brands sell on Amazon, Walmart and eBay, said he’s been advising sellers to be careful about what claims they make on coronavirus-related products. If sellers can’t prove their product does what they say it does, Nelson said they should steer clear of claiming their product kills or prevents transmission of the new coronavirus.

“There’s a lot of sellers who don’t have the backing or understanding about what they can and can’t say about disinfectants,” Nelsen said. “We’re trying to mitigate the risk to consumers in that way.”

EBay has also faced similar issues with sellers looking to capitalize on consumer fears about the coronavirus. An eBay spokesperson told CNBC that the company has taken down more than 20,000 products for making unsubstantiated health claims about the coronavirus.

“On our marketplace, eBay has been employing a combination of digital and manual surveillance tools to remove products marketed with the term ‘coronavirus,’ which violates our policies regarding making unsubstantiated health claims,” the spokesperson said. “We are also taking action to mitigate the inflated price of masks listed on the site.”

The company also sent a notice out to sellers reminding them of its listing policies and warning against misuse of keywords like “Coronavirus,” “Covid-19,” “Virus” and “epidemic.” The notice, which also warns against price gouging, says eBay will remove listings, lower seller ratings and suspend a seller’s account, among other actions, if it finds products that violate its policies.

Despite the crackdown, the platform still hosts its fair share of face masks with coronavirus marketing claims, some of which have been removed since CNBC first identified them. There’s also plenty of examples of pandemic and epidemic survival kits on eBay. A listing for a hat, which eBay has since removed, claimed it would “prevent droplet transmission…of any virus” and mentioned coronavirus in the product description, which violates eBay’s policies. Users also posted on eBay community forums with complaints about dubious face masks.

CNBC Tech | eBay coronavirus hat
EBay
CNBC Tech | eBay coronavirus face mask
EBay

Alibaba last month announced a similar crackdown on dubious face masks. The company announced in a Weibo message Feb. 4 that it had intercepted and removed 570,000 masks of questionable problems.

Other platforms, including Walmart and Etsy, said they’d removed products with misleading medical claims. An Etsy spokesperson told CNBC that it has removed “thousands of items with medical claims that violate our policies,” including those that claim to protect against the coronavirus, over the past few days. A Walmart spokesperson said the company is continuing to monitor the site for products that make unsubstantiated medical claims, but declined to share data on how many products it has removed so far.

Price gouging remains rampant

As supply has diminished, the price of hand sanitizer, face masks, disinfectants, hazmat suits, gloves and other products has skyrocketed. Many online platforms have distributed notices to sellers warning them not to gouge prices. Others have removed listings or suspended sellers who fail to follow the rules.

Amazon has suspended or removed tens of thousands of deals from sellers that it accused of charging customers unfair prices, the company said last week. Walmart and Etsy told CNBC that they’re taking down listings with inflated prices, while eBay said it’s complying with local price gouging laws and removing masks that are “priced 10x above the standard price of approximately 75 cents a piece.” The companies didn’t provide specific data on how many listings have been suspended or removed for price gouging.

On Amazon, the price of face masks and hazmat suits has surged. According to Jungle Scout, which creates product research software for Amazon sellers, the average price of DuPont hazmat suits has risen 13% from $9.68 to $11.08, though the site had suits listed as high as $23.37. CNBC found one third-party listing for a DuPont hazmat suit priced at $64.99.

The average price of N95 face masks has gone up even more. Before Amazon ran out of stock, N95 face masks were priced at $13.28, but Jungle Scout found prices have since spiked 582% to $63.95. Sellers are also gouging prices of disinfectant wipes and hand sanitizer, with a two-pack of travel-size Purellsanitizer priced at $30.

There are numerous examples of price gouging on other platforms as well. A 20-pack of Gerson 1730 face masks is currently available on eBay for as much as $148, while a pack of five 2.5-ounce Germ-X hand sanitizer bottles costs $500.

On Walmart’s marketplace, CNBC found a listing for a 50-pack of Halyard surgical masks priced at $50 and 10 boxes of 50 disposable masks for $80. Both were removed from the site after CNBC asked Walmart about the listings.

Meanwhile, on Etsy, a package of 20 Gerson N95 masks was $75 and 20 N95 Moldex masks were $250. The listings were removed after CNBC asked Etsy about them.

CNBC Tech | Etsy price gouging
An example of mask price gouging on Etsy.
Etsy

Price gouging isn’t a new phenomenon on the web, but it’s likely to continue as the coronavirus spreads. Amazon faced complaints of price gouging during Hurricane Irma in 2017, when customers complained of sharply inflated prices for essentials like bottled water.

In some cases, sellers who inflate prices may not just be violating a site’s policies. Many U.S. states have laws in place to prevent price gouging. Sellers who fail to follow the law can face fines of tens of thousands of dollars in some states.

 

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