Price-gouging rampant during crisis

One in three Australians were the victims of COVID-19 price gouging, says consumer advocacy group CHOICE.

Analysis released by CHOICE showed that around one third of Australians paid more than necessary for essential items and at least four in 10 reported higher prices than usual as retailers seemingly took advantage of the demand caused by the crisis.

Consumers made these reports in the hundreds, said CHOICE, with myriad tip-offs on higher pricing items such as masks, hand sanitiser and products raided by hoarders, including toilet paper and tissues.

“The coronavirus triggered some of the biggest shocks to markets and supply we’ve seen in a generation” said CHOICE campaigns and policy adviser Amy Pereira.

And, as many may assume, the highest prices weren’t being paid for toilet paper, masks and sanitiser. A CHOICE investigation revealed that people who bought big ticket items suffered the most, with the cost of a freezer bumped up by as much as 63 per cent.

 



“As part of our research, we’ve spoken to supply chain experts who just can’t see justification for the price increases as high as what we saw in white goods like freezers,” said Ms Pereira.

“It’s vital that we look at what happened during this crisis and put protections in place to make sure Australians don’t get exploited again – whether that be through price gouging or panic marketing.”

When respondents to the CHOICE Consumer Pulse survey were asked whether prices for essential goods were “generally higher than usual”, 38 per cent of people in NSW and 37 per cent in Victoria said yes – with the figures only getting worse from there, CHOICE noted.

“All states and territories need to update laws for price gouging, so our consumer protections are fit for purpose in 2020 and beyond. Price gouging in a crisis should be illegal – state consumer ministers can and should act to stop price hikes in future crises,” explained Ms Pereira.

“It’s important that we look back at the height of the crisis and assess what went wrong. As CHOICE has investigated business behaviour over this period, we’ve seen some inexcusable opportunism, panic marketing and price gouging from retailers across the country.

In Australia, price gouging – raising prices for essential goods when supplies are low – is technically not illegal in most cases.

“It is widely considered deeply unethical and downright nasty, especially in times when a potentially deadly virus is infecting the community at an alarming rate,” said CHOICE.

There are currently no standing laws preventing sellers profiting from temporary demand and supply conditions.

However, the Australian Competition and Consumer Commission (ACCC) adopts an “unwritten law notion of unconscionability into the statute”, where if it can be proved that the “victim is particularly vulnerable or suffers a special disadvantage, which is exploited by the stronger party” then a seller could be prosecuted.

While price gouging is not illegal, these caveats mean businesses buying and selling goods during the COVID-19 pandemic should take care to ensure compliance on price-setting.

“The ACCC cannot prevent or take action to stop excessive pricing, as it has no role in setting prices,’ said ACCC char Rod Sims.

“But in some circumstances excessive pricing may be unconscionable, for example where the product is critical to the health or safety of vulnerable consumers. If a business makes misleading claims about the reason for price increases, it will be breaching the Australian Consumer Law.”

Did you see examples of retailers engaging in panic marketing and price gouging during the crisis? What were the worst examples you witnessed?

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Written by Leon Della Bosca

Leon Della Bosca has worked in publishing and media in one form or another for around 25 years. He's a voracious reader, word spinner and art, writing, design, painting, drawing, travel and photography enthusiast. You'll often find him roaming through galleries or exploring the streets of his beloved Melbourne and surrounding suburbs, sketchpad or notebook in hand, smiling.
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