Price Gouging And The Consumer Protection Act
Washington State’s Unfair Business Practices Act, commonly referred to as the Consumer Protection Act, or “CPA”, provides powerful protections and remedies for consumers who have been harmed by a business’s deceptive acts or practices. You can read more about the CPA here and here to gain a better general understanding.
But what about price gouging? Unlike many jurisdictions, Washington State has no specific law forbidding price gouging, or providing any remedies for it specifically. Price gouging generally refers to a situation where a vendor or service provider takes advantage of consumers by raising prices for essential goods and services during an emergency or disaster. Businesses use this tactic to maximize profits during times of high demand, such as when consumers are searching for necessities like food, water, and medical supplies. When these resources become scarce, consumers are forced to bid up the price, encouraging bidding wars, withholding of products for sale, and further price increases as the market frenzy pits needy consumers against one another. Whether raising prices constitutes price gouging varies by jurisdiction, but generally speaking, a court will compare the price before and after the emergency arose, and consider surrounding circumstances, such as whether the vendor’s own costs increased and merely had to be passed along in the form of higher prices to consumers, or whether the prices increased merely to pad profits. Some have wondered whether price gouging may give rise to liability under the CPA. The Washington State Supreme Court has now officially answered that question in the affirmative. In Greenberg v. Amazon.com, Inc., numerous plaintiffs sued Amazon in federal court, claiming that Amazon violated the CPA by raising the prices of various essential goods during the Covid-19 pandemic. Amazon claimed that the CPA did not allow price gouging claims, and the United States District Court for the Western District of Washington asked the Washington Supreme Court to weigh in on this question of state law. In a 7-2 decision, the Supreme Court held that price gouging can constitute a CPA violation. However, the Court declined to adopt any percentage threshold for what does or does not constitute price gouging (the Court felt that was a job for the legislature).
Because the Washington Supreme Court was only answering questions of state law for a federal court, the Greenberg case has not reached its conclusion. Its ultimate outcome is likely to have big implications for Washington consumers, and may put businesses in a position where they will need to consider their pricing more carefully to avoid a price gouging claim under the CPA.
The lawyers at Beresford Booth have a wealth of experience in litigating claims under the CPA. We would be happy to assist you.
To learn more about Price Gouging And The Consumer Protection Act, please do not hesitate to contact us at info@beresfordlaw.com or by phone (425) 776-4100 for assistance.