Price Gouging Weekly Round Up - November 30, 2020
Price gouging enforcement and litigation is front and center for company counsel and business managers nationwide. Our weekly round up highlights some of the most relevant news and information to our clients and friends.
On November 23, 2020, the Chicago City Council unanimously approved an ordinance capping service fees that third-party delivery companies may charge to Chicago restaurants. The restriction prohibits third-party food delivery companies from charging more than a 10% delivery fee on online restaurant purchase orders. Violators may face fines ranging from $1,000 to $2,000 per offense. According to Ald. Brendan Reilly (42nd), “COVID unfortunately exposed what I would consider to be price gouging of restaurants by some third-party apps. This is an issue in every major city in America. So it’s my hope that this will provide some much-needed relief to a restaurant industry that will be, in some ways, taken advantage of, especially given their heavy reliance now on carryout and delivery to make a very modest bottom line.” The restriction, which immediately went into effect, remains in effect until indoor dining returns to 40% capacity or higher for at least 60 days. Similar restrictions have been put in place in New York and elsewhere.
As gyms remain closed or at limited capacity, some store owners are seeing a shortage in exercise equipment. Keeping things like dumbbells in stock has been nearly impossible one store owner reports. According to the store owner, “some people [are] buying up inventory and price gouging online.” As people continue to try to set up home gyms as an alternative to heading to the gym during the holiday season, businesses should keep in mind that some state price gouging laws have broad application and may cover goods such as exercise equipment.
On November 24, 2020, the Department of Justice (DOJ) announced that two Texas men were charged with attempting to fraudulently sell 50 million facemasks that did not exist. According to the DOJ, the men sought to sell the non-existent masks for more than $317 million, a price five times the public list price set by the mask manufacturer. The men would have profited up to $275 million as a result of the fraudulent scheme. The DOJ states that if convicted, both men “face up to five years in prison for conspiracy and up to 20 years in prison for each of the two counts of wire fraud. Each of these charges also carry a possible $250,000 maximum fine.”