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COVID-19

California suit claims eBay lets price-gougers exploit coronavirus fears

Nick Wicker  

Nick Wicker  

(May 26, 2020) - A California woman who claims to be an essential worker has accused eBay Inc. of letting sellers engage in “rampant price gouging” on masks and other high-demand items during the COVID-19 pandemic.

Mercado v. eBay Inc., No. 20-cv-3053, complaint filed, 2020 WL 2121571 (N.D. Cal. May 4, 2020).
 
In the proposed class action filed May 4 in the U.S. District Court for the Northern District of California, Jeanette Mercado alleges the online marketplace also violated California law by claiming to prohibit sellers from charging exorbitant prices for essential products while actually encouraging and benefiting from price gouging.

Emergency caused spike in demand

According to the complaint, Mercado is a California resident and, as an Uber and Lyft driver, an essential worker for the purposes of Gov. Gavin Newsom’s COVID-19 shutdown.
 
The governor declared a state of emergency March 4, and eBay announced the next day it would ban price gouging on household essentials such as disinfectants and toilet paper, as well as N95 masks and other protective equipment, the complaint says.
 
However, Mercado says she purchased a two-pack of N95 masks on eBay on March 14 for $23.98, a 300% markup from the retail price of $8.99 listed at Home Depot and other stores.
 
Amid the heightened demand online for such items after they were cleared out from store shelves, eBay should have known it could not enforce its ban on price gouging across the 1.3 billion auctions hosted on its site daily, the complaint says.
 
The complaint says eBay took steps it knew to be “superficial and ineffective” so it could avoid bad publicity while “allowing price gouging to flourish on its platform.”
 
EBay has a financial incentive to let “rampant” price gouging continue because the company charges a percentage of the total amount after items have been sold, the suit says.
 
The complaint alleges eBay violated California’s statute against price gouging, Cal. Penal Code § 396, which forbids price increases of more than 10% after a state of emergency has been declared.
 
Mercado’s complaint says the price gouging violation is a misdemeanor punishable by a fine of up to $10,000, imprisonment of up to a year or both.
 
Mercado also claims the company’s actions violate the California unfair-competition law, Cal. Bus. & Prof. Code § 17200, and the Consumers Legal Remedies Act, Cal. Civ. Code § 1750.
 
Mercado also asserts an unjust enrichment or quasi-contract claim.
 
Mercado seeks to sue on behalf of a statewide class of California eBay users and a nationwide class of those who bought essential products such as masks or hand sanitizer at a price 10% greater than the price charged on eBay before a state of emergency was declared in the U.S.
 
She also seeks a court order certifying both classes of plaintiffs, an injunction against further price gouging practices on eBay, restitution and attorney fees.
 
Mercado is represented by Alan Kang of A.K. Law in Orange, California.

To keep up-dated on the latest news and information regarding the COVID-19 pandemic, the economic impact, and the government’s response, at Thomson Reuters’ COVID-19 Resource Center, and you can follow Reuters.com or the Reuters App.

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