Need to know
- Price gouging on essential items during the coronavirus or any crisis should be against the law – but so far it's not
- We're calling on sellers of all stripes to let their conscience be their guides and stop flogging overpriced goods
- So far, eBay Australia and Gumtree have committed to shutting down online price gougers – we're calling on Facebook and others to follow suit
It may surprise you to learn that price gouging – jacking up prices for essential goods when supplies are low – is technically not illegal in most cases. At least not in Australia.
But we're guessing you're well aware that the practice is widely considered deeply unethical and downright nasty, especially in times when a potentially deadly virus is infecting the community at an alarming rate.
CHOICE has a simple message for anyone engaging in price gouging during the coronavirus crisis (or any time for that matter): don't even think about it.
We've heard about face masks being sold for 10 or 20 times their regular price, hand sanitiser prices doubling, chest freezers more than quadrupling in price...
This message goes double for online platforms that have enabled price gouging, including Facebook, eBay and Gumtree.
But appeals to our collective conscience haven't stopped many from taking advantage of high demand and tight supply, in effect kicking the community when it's down.
Through our social media and other channels we've heard about face masks being sold for 10 or 20 times their regular price, hand sanitiser prices doubling, chest freezers more than quadrupling in price, and staples like potatoes suddenly becoming very expensive. And that's just the very short list.
In better news, both eBay Australia and Gumtree appear to be coming around to doing the right thing.
eBay Australia commits to removing inflated listings
We contacted eBay Australia yesterday about the many incidents of price gouging that we'd seen and were told by a spokesperson that it was in the process of taking down listings of items like toilet paper, face masks and hand sanitiser "at grossly inflated prices" as well as restricting the accounts of online price gougers.
But keeping up with the bad actors will be a tall order, the spokesperson says.
We may take even more drastic action in the coming days such as blocking any listings of face masks, hand sanitiser and toilet paper to all but a handful of authorised sellers
eBay Australia spokesperson
"Our teams in Australia and globally are working around the clock to manually pull down hundreds-of-thousands of inflated listings, but are struggling to keep up. While we take every step to be vigilant against listings that break our rules, eBay is Australia's largest online marketplace with 1.4-billion listings from millions of sellers around the world."
The spokesperson adds that eBay "may take even more drastic action in the coming days such as blocking any listings of face masks, hand sanitiser and toilet paper to all but a handful of authorised sellers".
Gumtree moves to block price gouging
After the original publication of this story yesterday, Gumtree got in touch to say it too is putting measures in place to stop the price gougers.
"To curb pricing practices that run counter to the community-minded spirit of Gumtree, from Friday 20 March, Gumtree will temporarily ban listings for health care masks, including N95/N100 and surgical masks, hand sanitiser/gel, disinfecting wipes and toilet paper," a spokesperson tells us.*
CHOICE was unable to contact the Australian offices of Facebook.
*Updated 20 March 2020
eBay has been a busy site for online price gougers, but the platform tells CHOICE that it's taking action against extreme overpricing.
When retailers mislead
There are some practices around price gouging that are illegal, as the ACCC makes clear.
The regulator doesn't control pricing, but it does have a say on how businesses treat their customers.
One practice that's especially relevant to our current situation is when retailers lie about the reasons prices have gone up.
If it's a fabrication, it's a violation of the Australian Consumer Law.
We've heard of some businesses trying to explain massive price hikes as a way of controlling demand and preventing stockpiling. We don't buy it, and neither should you.
Restricting the quantities people can buy would achieve the same result and have the added benefit of not seeing customers get ripped off.
If it's a fabrication, it's a violation of the Australian Consumer Law.
But we should also bear in mind that not all price hikes are evidence of gouging.
In some cases, higher costs could be legitimately contributing to higher prices, so some increases may be fair.
Whatever the case, store staff are rarely responsible for product pricing, so let's not take the frustrations we all feel out on them.
If retailers are unnecessarily inflating prices on products that are critical to the health or safety of vulnerable consumers, that could be ruled unconscionable conduct by the ACCC.
Whether or not the kind of behaviour we've seen falls under this prohibition remains to be seen.
Online marketplace on notice
Much of the price gouging activity has been happening online on secondary marketplace sites like Facebook, eBay and Gumtree.
Many would-be entrepreneurs, it seems, come out of the woodwork in moments like these.
In most US states, price gouging is illegal, and many major platforms are reportedly taking down price gouging posts across the USA.
CHOICE is calling on the Australian counterparts of these and other tech companies to follow eBay and Gumtree's lead and do the same.
We're calling on the big secondary marketplaces to come clean about the action they're taking to stop price gouging.
In most US states, price gouging is illegal, and many major platforms are reportedly taking down price gouging posts across the USA
We're calling for a clear and transparent policy across the online industry aimed at removing ads or posts with high prices for essential goods like face masks, hand sanitiser, toiletries, medicines and food.
These big companies should have systems and processes in place to remove these ads quickly, as is happening in other markets.
The ACCC has said it is getting in touch with these Australian platforms with a similar message.
Why is price gouging happening?
The Australian food and grocery industry has made one thing clear over the past few weeks: the shortage of goods has been created by panic buying, not by an underlying shortage of product.
There is plenty to go around, the industry says, if everyone takes only as much as they need and avoids hoarding.
The irony, of course, is that the very people so worried about shortages have created the shortages (in much the same way that people worried about a share market crash end up causing one).
We back the position that many politicians and businesses have taken on panic buying: just don't do it.
CHOICE on the case
We hold out hope that price gouging and panic buying will soon come to an overdue end, and that the better angels of our nature will prevail.
In the meantime, we've set up a thread on CHOICE Community and are reaching out to our campaigns supporters in an effort to keep sellers honest.
You can also let us know if you spot a price gouger on our Facebook page.
We want Australians to be our eyes and ears, to help us keep businesses honest and prevent sellers big and small from making a bad situation worse.
We're on your side
In more than 60 years of making a difference for Australian consumers, we've never taken ads or sponsorship.
Instead we're funded by members who value expert reviews and independent product testing.
With no self-interest behind our advice, you don't just buy smarter, you get the answers that you need.
You know without hesitation what's safe for you and your family.
And you'll never be alone when something goes wrong or a business treats you unfairly.
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Stock images: Getty, unless otherwise stated.
