On account of violating its price-gouging policies, Amazon has suspended more than 2,500 seller accounts for coronavirus-based price gouging and removed more than 530,000 high priced offers from its marketplace. As Covid-19 spreads, consumers are increasingly resorting to the online purchase of products. The third-party sellers are hence seeing a spike in demand and overcharging consumers for the certain needs of the hour supplies. CNBC found that examples of face masks were sold for as much as $195.

Searching for "Purell hand sanitizer" turned up right at the top with two offers - small bottles priced at $34, and a four-pack of large bottles priced at $299. Several items were marked "currently unavailable" on Amazon and Flipkart. In India, masks were sold by third-party sellers online at a premium of over 300 percent. A basic surgical mask generally used for prevention originally priced at Rs 10 each was sold at Rs 40, and N-95 masks originally priced at Rs 150, were sold up to Rs 500, thus exploiting consumers during the Covid-19 season.

Not to spare, the prices of Paracetamol tablets, a generic drug and an analgesic used for the treatment of cold and fever have shot up by 40 percent. Also considering the fact that the majority of bulk pharma intermediates are imported into India from China, the price of Penicillin G, a raw material used in antibiotics has increased by 58 percent.

On the issue of an increase in prices of N95 masks, Union Health Minister Harsh Vardhan said, "If people are taking advantage and misusing this time, then they should be labeled as "black sheep" and a mechanism to punish them should be implemented," ANI reports. According to a news report, Amazon was selling two 3M N95 Masks for Rs 1,400, while its close rival Flipkart was selling them at Rs 1,983. Flipkart further went on to claim that they were giving a 42 percent discount to buyers on the purchase of the product, and selling them at Rs 1,150.

3M N95 masks out of stock at Flipkart
3M N95 masks out of stock at FlipkartFlipkart.com

Senator Ed Markey writes to Amazon's Jeff Bezos 

In a letter to Amazon CEO Jeff Bezos by Senator Ed Markey, D-Mass seeking more information on the steps taken by the company to determine unfair pricing and issue a crackdown on price gouging by sellers on the platform, especially those selling hand sanitizers, masks, and general medical supplies.

Brian Huseman, Amazon's vice president of public policy replied to Markey saying, the company is "proactively monitoring" the marketplace for unfair prices and "aggressively" enforcing its fair pricing policy in order to protect its customers.

The World Health Organization (WHO) had already warned about the shortage of Personal Protection Equipment (PPE) in the wake of the coronavirus scare, which has resulted in panic buying, misuse and a rise in consumer demand. WHO has thus urged the industry and the government to increase the manufacturing of hand sanitizers, PPEs, and masks by 40 percent. It has also issued a directive on 'When and How to use masks" to make users aware of the precautionary measures to be taken to protect themselves, and their near and dear ones from Covid-19 attack.

How does Amazon detect and prevent price gouging?

To detect price gouging by sellers, Amazon constantly compares prices submitted by sellers with the current market rate and the prices in the recent past of a product, within and outside of the Amazon marketplace. In part, the company also uses machine learning models to detect price gouging.

3m N95 masks sold on Amazon India
3m N95 masks sold on Amazon IndiaAmazon.in

In light of the coronavirus scare, Amazon has stepped up its human monitoring efforts. It is deploying an additional dedicated team that will work 24/7 around-the-clock, seven days a week to detect price gouging by sellers on critical items that are needed for the hour such as face masks and hand sanitizers.

Amazon actively monitors its stores

Amazon stated in its official blog, "We're also working to ensure that no one artificially raises prices on basic need products during this pandemic and have blocked or removed tens of thousands of items, in line with our long-standing policy. We actively monitor our store and remove offers that violate our policy."

Bearing in mind the interest of its shoppers and following a customer-first approach at Flipkart, an official spokesperson said, "We follow a marketplace model as per Government FDI policy and the prices and offers are decided by our sellers. Given the high demand for products, we have issued advisories to our sellers to keep the best interest of our customers in mind and ensure they are pricing essential products appropriately in this fight against COVID-19. In case of breach of advisory, the seller is delisted from the platform."

In China, for example, Amazon has leveraged its fulfillment network to donate millions of items such as disposable gloves, protective masks, medical isolation suits, and other medical supplies to healthcare professionals in affected areas.

Efforts to curb price gouging amid coronavirus outbreak

Amazon has blocked and removed more than 1 million products from third-party sellers cashing on the coronavirus fears of consumers with misleading claims. Products such as face masks that registered maximum sales during the last week, were sold using inappropriate marketing claims by naming them unconventionally with specific keywords such as "N95 face mask," priced at $13.28 which comes with a specific type of respirator to keep out small airborne particles and help combat coronavirus effectively. The product quickly ran out-of-stock on Amazon considering the surge in demand.

An Amazon India spokesperson said, "We are disappointed that some sellers are attempting to artificially raise prices on basic need products during a global health crisis. In line with our policy, we continue to actively monitor our marketplace and take necessary action (including removing offers) against sellers who are selling such products above the MRP, which is in violation of Indian laws."

Coronavirus Creatives

Flipkart's official spokesperson spoke about the company's plan of action during the crisis stating, "We value the health and safety of our marketplace sellers as well as MSMEs and their employees and partners. The Flipkart Seller Hub is continuously in touch with Flipkart sellers to promote preventative healthcare and hygiene. Our team has communicated necessary precautions in order to ensure the health and safety of our marketplace sellers and their staff amid concerns over public health during the recent global coronavirus (COVID-19) outbreak. Our marketplace team has appealed to the seller community to ensure that products like masks, sanitizers, antiseptic liquids, and handwash are made available to our customers at all times at the best possible prices. They have been advised to dispatch these products on priority. To ensure faster delivery, sellers have been advised to inward these products to smart warehouses and Flipkart warehouses."

What should consumers do to not fall prey to price gouging?

Besides efforts by companies to stop price gouging by third-party sellers, it is important for consumers to not overstock supplies and resort to panic buying during these tough times. You can consider buying alcohol prep pads instead of liquid sanitizers, which are available in plentiful and affordably priced online.

You can use gloves to hold handles, subway poles, stair railing or even open the door, the gloves may not completely prevent the spread of the virus, but can help reduce the risk of being affected.

As an alternative to expensive sanitizers, you can make a liquid hand sanitizer of your own, if you find 70% alcohol in a drugstore and mix it with a little glycerine to make a do-it-yourself sanitizer. Do not dilute the alcohol too much as according to the Centers for Disease Control & Prevention, it suggests the alcohol strength in a sanitizer should be at a minimum of 60%.