Class Action Filed Against Amazon in California

Amazon and its third-party sellers have been accused of violating a Californian law for price gouging as the cost of some essential items reportedly increased by at least 500%.

Lawyers at Hagens Berman filed a proposed class action stating that Amazon had violated the law that bars price increases of more than 10% during declared emergencies on essential goods. Such items would typically include food, cleaning materials, and medical supplies – all of which were bought by customers amidst a mass panic.

These increases as reported on Bloomberg “are flagrantly unlawful under California penal law, which makes presumptively illegal any price increase exceeding 10% during a state or local emergency,” Victoria Ballinger and Mary McQueen allege in a suit filed in the U.S. District Court for the Northern District of California.

Despite the allegations, Amazon stated on their website, that “Amazon has zero tolerance for price gouging and longstanding policies and systems to prevent this harmful practice.

“Amazon has already removed well over half a million [of] offers from our stores due to coronavirus-based price gouging. We have suspended more than 3,900 selling accounts in our U.S. store alone for violating our fair pricing policies. We began taking these enforcement actions promptly upon discovering this kind of misconduct, and we’ve been partnering directly with law enforcement agencies to combat price gougers and hold them accountable.”

The online retailer has seen sales increase, with some items being up more than 1,000%. With customers avoiding brick and mortar stores,  they opted for Amazon, where some supplies such as face masks, jumped by more than 500% in price; masks went from less than $20, up to £120.

Medication for colds, according to the plaintiffs, hiked up from $4.65 to $35.99, an increase of 674% and black beans – a staple food item that was popular in demand amongst other tinned food – went from $3.17 to $24.50, an increase of 672%.

Despite these claims, Amazon, on the 23 March previously announced that they have “dynamic, automated systems in place that locate and remove unfairly priced items.”

They claim to have deployed a dedicated team that’s “working continuously to identify and investigate unfairly priced products that are in high demand”, such as protective masks and hand sanitizer.

“If we find a price that violates our policy, we remove the offer and take swift action against bad actors engaged in demonstrated misconduct, including suspending or terminating their selling accounts and referring them to law enforcement agencies for prosecution under relevant laws”, the retail giant posted on their blog.

Nonetheless, the complainants are accusing Amazon of violating California’s  Unfair Competition Law, of negligence and negligence per se and unjust enrichment. They are thus seeking: damages, restitution, public injunctive relief, punitive damages, and attorneys’ fees and costs.

This is not the first time Amazon has been under scrutiny during the coronavirus crisis. In France, the company suspended its distribution activity after a court ruled it had to stop all non-essential deliveries.

The ruling followed after a complaint filed by a French labour union accused the online delivery giant of endangering the lives of workers. Amazon said it was “perplexed” by the court ruling which ordered the company to restrict its local delivery operations to essential goods only, or face a penalty of 1 million euros ($1.1 million) for each day it failed to comply.

Citing the high penalties imposed by the court and the “complexity inherent in our logistic activities,” Amazon – which plans to appeal the ruling-  said it would temporarily suspend activities in their distribution centres “despite the huge investment that we have made to ensure and strengthen [by] additional measures the safety of our employees who remained mobilized during this crisis.”

The online retailer had stated they have implemented safety measures including “temperature checks, masks, and enforced social distancing which [have] received the approval of health and safety representatives at multiple sites.” They were set to re-open in France on 22 April, after a two-day delay due to the pending appeal.

The company also faced similar criticism in the US, over the health and safety of its employees. Earlier this month, Amazon responded that they may begin firing employees that violate social distancing guidelines and policies that were put in place in response to the pandemic crisis; employees claim, however, that the demands of their job make it impossible for them to comply with the policy.

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