One in three Australians were the victims of COVID-19 price gouging

The highest prices weren’t being paid for toilet paper, masks and sanitiser, either.

couple buying a freezer

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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    COMMENTS

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    BrianP
    26th Jun 2020
    11:15am
    Government should stop being so soft and make excessive price gouging illegal with big fines and prosecution. It is an Australian epidemic. We do feel ripped off far too often.
    Horace Cope
    26th Jun 2020
    12:00pm
    Sorry, BrianP, governments should have no part to play in how a business chooses to operate providing what it does is not breaking any laws. The prices being offered to consumers will be rejected if another business is offering the same, or similar, item at a more competitive price. That's how Capitalism works and the other choice is not acceptable in a free society such as Australia.
    Lookfar
    26th Jun 2020
    1:02pm
    I totally agree BrianP, I would suggest a compulsory "Open Book" from the retailer, how much they paid for the item, how much they have allocated for what costs, how much they sold it for last year, so the customer can see the mark-up train.
    What this would lead to is customers makng judgements on the Value Added by the retailer and if it proved a woeful greedy situation, - perhaps a particular industry wide woeful greediness, then some Trade Practices legislation may kick in, or alternatively Customer Co-ops could be set up to be able to bargain with mass purchases for the items covered. - not wanting to go into that too deeply because each situation is different, but simply put, - there are three components to the economy, Producers, Traders, (retailers, wholesalers, etc.) and Consumers.
    'Modern' Corporations try to be both Producers and Traders, - so-called Vertical integration, the which, America has outlawed but is now dominated and significantly controlled by those same 'outlawed' corporations, - who have bought politicians to change the laws to suit them, and continue to pay those politicians to stop most 'Trust busting' efforts.

    That Consumers are at the 'mugs game' end of this arrangement is obvious to most consumers, but many do not realise that it is quite easy to set up a purchasers co-op, or other Community organisation, to counter this flagrant imbalance, and indeed our laws favour such initiatives, - within reason.
    Al
    26th Jun 2020
    2:04pm
    I don't agree. We are a caring and supportive community and we don't have to accept that the typical processes of capitalism should be 'the rules'. There are plenty of folks old and young who don't realize until it's too late after they have paid a comparatively very high price / have been ripped off and it's too late. Without any doubt there are people in our/any community who will take advantage of any opportunity to quote less than fair prices. Plenty of other countries in the world have different economic systems, modern Vietnam just one, many products are under strict price controls, including many items of food, and the government ensure that food producers can make a quite acceptable profit. It can be different!!!
    Greg
    26th Jun 2020
    3:57pm
    So you don't like living in a free country, should move to N Korea where everything is controlled.

    You know what would happen if there was restrictions on pricing? There would not be sales, retailers wouldn't be selling cheap, prices would be the same everywhere.

    Like petrol pricing, we have competition so the prices go down, down, down than they go back to "normal". If the government stepped in you would see the fuel price stay at that higher level.

    If people went out to freezers because of this virus they are mad, no doubt the same dunderheads who bought out all the toilet paper and pasta.

    THEY made a choice to pay top dollar for those appliances, THEY didn't have to.
    MB100D
    26th Jun 2020
    11:36am
    It's just Business, if you don't like the price - don't buy it.
    There are many businesses to chose from, some hike prices for various reasons, most I have found don't. The consumers can vote with with their feet.
    On the Ball
    26th Jun 2020
    11:40am
    I often see articles that refer to a "Choice" article on such and such, which is really only a bait ad for Choice. How 'bout publishing that article in its entirety?

    But it leads me to another idea: Why isn't Choice free? Why doesn't our benevolent Government sponser it?
    If they are genuine about stopping rippoffs and helping us get the best value for our dollar, why not?
    KSS
    26th Jun 2020
    12:33pm
    'Choice' is not free so it can maintain its independance and be seen to be independant. Look at tge ABC to see just how 'independant' they are whilst accepting Government funding.
    Realist
    26th Jun 2020
    12:40pm
    You're "on the ball". Choice & companies like Choice are a necessity in a free society, providing of course they are unbiased.

    Gov funding is one way, another (and I have written to "Choice") is to offer a discount membership to the elderly. This was their reply:-

    [SNIP]Thanks for getting in touch, we do not have pensioner rates at the moment, however this is something we may look to in the future. Thank you again for your feedback.[END]

    I could have written the answer before I sent the email, but, on the slim chance I could be wrong, I wrote it anyway.
    Wstaton
    26th Jun 2020
    12:48pm
    That may be true but as a previous commenter mentioned you don't have to buy anything if you don't want to. It also does not change the fact that there is price gouging or are you saying they are telling a lie.
    Wstaton
    26th Jun 2020
    1:30pm
    Unfortunately, Realist when entities like this are government-funded that entity is always expected to portray it in a good light and not report the bad things. We can see this with the ABC where it reports both the good and bad. Then comes "death by a thousand cuts" and there is no worse than the current government. It should also be remembered that it is the current government making all the decisions whether they are good or bad. Shadow governments have no say in anything that the government does unless it goes through the Senate where it may possibly be stopped. This doesn't happen very often as a lot of the stuff goes through by regulation. Much like Trumpies Executive orders.

    Needless to say, there has to be an appearance of current decisions by government, good or bad, have more prominence than shadow cabinet. The ABC is there to inform the public if they didn't what sort of state would we be in?

    A point in fact as well is that the ABC costs 19.2 cents per day for all adult people in Australia. In the UK who do it differently, a TV licence costs each household 77.3 cents a day. This also is levied separately on online tv stations. This is where the funding for the BBC comes from.

    So what should the ABC do just broadcast the good government decisions and ignore the bad? If it did you can bet your bottom dollar that rather the ABC's funds being cut I bet they would be increased.
    blue trumpy
    26th Jun 2020
    12:35pm
    The whitegoods manufacturers have no control over the retail price of their product. It's the retailers who decide the selling price of everything they sell and when demand outstrips supply prices will always go up.
    Lookfar
    26th Jun 2020
    1:18pm
    blue trumpy, you are correct in that it is now illegal to have a 'Recommended Retail', but it is also true that manufactureres may decide their own selling price and many other conditions, so if Govt. laws affect the Manufacturers, when the manufacturers say Frog - the Retailers will jump.
    The manufacturers have no really enforceable law to compell them to supply a 'naughty' retailer.
    Read the Trade Practices Act if you are really really keen, (it is a bit of a bugger of an act).
    The whole of section 40 shines some light, esp. 42, but the hidden teeth are that virtually no-one except the Govt may challenge it, - ie, bring a case.
    There may be a way to overcome that, I certainly do not have the resources so to do..
    MB100D
    26th Jun 2020
    5:04pm
    Can someone explain to me why all electronic retailers sell Apple products, (Phones, Tablets, watches etc) no lower than the Apple Shops. I always assumed that "Retail Price Maintenance was illegal)
    KSS
    27th Jun 2020
    12:49pm
    Apple does not allow discounting. Simple as that.
    MB100D
    29th Jun 2020
    8:54am
    Even if it's illegal?
    KSS
    29th Jun 2020
    12:55pm
    It is NOT illegal to refuse to discount. The buyer can buy or not, their choice.
    MB100D
    29th Jun 2020
    6:41pm
    From the ACCC:
    It is illegal for suppliers to:
    put pressure on businesses to charge their recommended retail price or any other set price, for example by threatening to stop supplying to the reseller
    stop resellers from advertising, displaying or selling goods from the supplier below a specified price.
    It is also illegal for resellers to ask their suppliers to use recommended price lists to stop competitors from discounting. In most cases, a supplier may specify a maximum price for retail.
    You really need to do some research before advertising your ignorance.
    Wstaton
    26th Jun 2020
    12:37pm
    Personally I am not too much concerned when people panic buying some non-essential items such as freezers and paying over the top when before they had no need for them. They are buying them because they want to panic buy items that are a necessity for all of us to survive. It is the gross profiteering of these essential items that really cheeses me off.

    As mentioned, the gross advantage of businesses providing sanitizers are taking is a prime example. I finally bought a bottle of sanitizer when they started coming available again and keep it in my car. I do not use it at home as I have plenty of hot water and soap.

    When I finally bought a bottle it cost me $17.90 for a 350ml bottle from a well known regional store. (not a supermarket or chemist). On the same day, I went to do my shopping calling in at Aldi. I was horrified to see that Aldi had just started getting supplies in again after all the panic buying. The price $10.80 for a 500ml bottle. This equates to paying $25.57 for 500 Ml at the previous store.

    It is now interesting to see that all the online ads appearing now (and are diminishing) are offering big discounts on sanitizers now they are more freely available. All these ads usually portray what a good essential service they are providing, aren't we lucky.

    It was good to see that in general the supermarkets are keeping essential food items steady only adjusting for seasonal availability. It was also good to see that they put an immediate clamp on the panic buying items because of the COVID clusters appearing in Victoria.
    Lookfar
    26th Jun 2020
    1:26pm
    W staton, all along the cheapest anti virul was/is Borax, - far more alkaline than those hand washes and therfore no need for 10 minutes washing, but big Pharma hates such cheap easy remedies that bite into there self justifying profits, so you would not realise that a $5. 500gm container will do you about 40 litres, - crazy eh?
    Wstaton
    26th Jun 2020
    1:53pm
    No thanks, Lookar,

    Borax is extremely alkaline and very irritant to some peoples skin. Even if one used it it certainly should not be left on one's skin it should be washed off.

    Apart from this, your timings are wrong. It is recommended to wash your hands with soap and water for 20 seconds, not the 10 minutes as you say.

    Considering all medical resources show that using soap and water is one of the most effective ways of sanitizing one's hands I prefer to go with them.

    I have not found anywhere where it states Borax does except that it makes your whites whiter in the wash. That is only because it reacts with other ingredients that are added.
    Laura52
    27th Jun 2020
    6:03am
    Hi Wstaton, was the sanitiser made in Australia or from overseas, as I used to shop at Aldis and many of their products are not locally made? Sanitisers from overseas are cheaper than sanitisers made locally in Australia. I would prefer the latter, to be made in Australia, encourage local manufacturing and less reliance on overseas companies... and are of better quality, from researching the ingredients compared to overseas hand sanitisers.
    KSS
    26th Jun 2020
    12:44pm
    There were no price hikes where I shop. However, toilet paper when available only came in packs of 20. Given I only usually buy a 6pack when necessary, I was forced to buy more than necessary and pay the corresponding higher price. However that was the same price as usual for 20 roll pack. As for hand sanitiser I never buy it and didnt then or now. And I still havent even seen masks never mind compare prices.

    As for white goods, wonder what all those freezers hold now? Supply and demand dictate prices. In many cases retailers withdrew discounts because they werent necessary. Supermarkets did the same with fewer specials. Trouble is people think they are entitled to discounts and specials when in fact we are not. It is entirely up to the seller to set the price. If you dont like the price dont pay it, go elsewhere. That is your right.
    As for fresh fruit and veg, we were all warned before covid that prices would rise due to poor crops as a result of both drought, floods and fires. How soon we forget about that.
    Greg
    26th Jun 2020
    4:00pm
    No price hikes where you shop?

    You didn't notice the supermarkets NOT having all their specials for a number of weeks?

    That's how THEY worked, they didn't put prices up just didn't reduce them like normal.
    KSS
    27th Jun 2020
    1:06pm
    Not having specials is NOT price gouging. There is nothing that says supermarkets must offer discounted goods nor that it is a condition of being a grocery store. So whinging that there were fewer specials is more an indication of the unrealistic expectations people have come to regard as a right than any indication if wrong doing. It isn't.

    Specials are a marketing ploy to get you into the store to spend more than you intended on stuff you dont need or even want. Nothing more.
    Rosret
    26th Jun 2020
    12:58pm
    Seems fair to me. All the food hoarders who made life really difficult for the elderly cost the community much more than a few hundred dollars.
    older&wiser
    26th Jun 2020
    1:28pm
    Isn't just retail shops. I was in an op shop yesterday and they had a mobility wheeler - 2nd hand but in good condition - wanting $400!!I am pretty familiar with prices as I was looking for one for an elderly relative earlier in the year, but really? - an op shop charging this amount for something they have been given? And they wonder why it has been sitting there.
    Jennie
    26th Jun 2020
    1:38pm
    If you really want to be ripped off, move into a retirement apartment in Adelaide. We have just moved out of one due to the management being corrupt and a toxic environment of spiteful resident cliques. Yes, we are very, very fortunate to be able to afford to move out as we lost one third of the selling price of our apartment to "legalised" gouging by the management.
    Eddy
    26th Jun 2020
    2:56pm
    Is it a co-incidence that all the examples are freezers? Does this indicate that there was a run on freezers, rather than washing machines or refrigerators, because hoarders were buying up perishable foods and needed somewhere to store them for long term? If the later is the case I have no sympathy for those who were 'ripped off', if people wanted to hoard food then they should be prepared to pay the price. Is that not how the free market works?
    I have been made aware of of some retailers increasing their prices for essential goods, like toilet paper or hand sanitiser, which I find totally contemptuous but for whitegoods I an unconcerned.
    Hillbillypete
    26th Jun 2020
    3:48pm
    You can see buy the comments the people who were ripping everyone off!!
    Snowflake
    26th Jun 2020
    5:27pm
    I recently had to buy a one way ticket for my daughter from Launceston to Canberra. It cost me $500, really????? I'd say that was price gouging. And you can't convince me that price gouging doesn't happen at the petrol bowser at holiday and long weekend times. Some companies are just plain greedy.
    KSS
    27th Jun 2020
    1:18pm
    And yet there are fewer flights from Tasmania, fewer people flying, only one airline operating and the same number of crew on board. Are suggesting they all take a pay cut so you can have a cheap ticket? You are being unrealistic to expect discounted flights at this time to anywhere much less on routes that are less popular in the best of times.

    It just means you have to consider whether the trip is really essential or not. And thats a choice we all have to make for ourselves.

    Depending the reason for that flight , it could well have been cheap at twice the price.
    Farside
    26th Jun 2020
    6:13pm
    Can anybody prove these prices are "gouging". For all I know the higher prices could still be discounted from RRP, just not at the lower pre-Covid sale price. I could make the argument that simply because sales volumes were estimated to be lower during covid restrictions, the retailers needed a higher margin to cover fixed costs like rent, insurances and salaries. Surely that is responsible retailing when you realise other retailers are distressed.
    Wstaton
    26th Jun 2020
    10:37pm
    On the other hand, sensible people wouldn't buy them. The same sensible people probably wouldn't panic-buy either. So hard luck to the panic buyers. Sensible people will just wait as it always eventually comes back to normal. At the same time, the sensible people who really needed a freezer normally would wait and being sensible would look at other suppliers who didn't price gouge. Apparently there were a few.
    Farside
    27th Jun 2020
    1:53pm
    Of course retailers expect some potential buyers to be price sensitive and will not buy at the higher price. They keep this in mind when setting the price. Sensible people might be reluctant to buy unless they find themselves in circumstances where deferring purchase has a high opportunity cost.
    Tanker
    26th Jun 2020
    6:29pm
    Welcome to Capitalism at work. In this day and age the prices are arrived at according to what the "market" will pay. It is not based upon a reasonable profit but on maximising it as far as it will go.
    Anyone who believes prices are not discussed between competitors at times are delusional. A nice lunch or a game of golf, nothing in writing and no witnesses, and the arrangements are put in place.
    Insider trading on the stock market also happens in a similar way.
    Wstaton
    26th Jun 2020
    10:49pm
    Unfortunately, this is not always true especially for essential items like food. You cannot go without it so you have to pay the price you have no choice if you do not want to starve. This is exceptionally worse for those on limited incomes because it means that they end up buying less than that actually needed and because of this gouging live on starvation rations.

    This is what is so objectional about a capitalistic system.
    Oxleigh
    26th Jun 2020
    6:53pm
    One of the rip offs we saw is the price of fuel.We know the prices of petrol came down because of the oversupply but the price of diesel did not come down as far as petrol.
    The reason is that the emergency and supply vehicles mostly use diesel.
    When confronted with questions and accusations they started to bring it down.
    Now most of the servos we see have put the price of petrol up gradually but the price of diesel is relatively cheaper, for how long this remains to be seen.The price of diesel should be cheaper than petrol anyway because it is the cheapest to produce but the thieving fuel companies are stealing from us.
    The government used to watch the price through the ACCC but when we complained to the ACCC a couple of years ago sent me an email saying they have no power over the price of fuel.
    The government told them not to get involved in the price of fuel. Except if there is absolute proof of collusion. One person did once and the ACCC took it to court, on the day of the hearing the witness said he made a mistake and it was thrown out, He is probably living in a mansion in Queensland now.
    For the ACCC it is Eggs, Bread and Milk and other items but don't touch fuel.
    Now the difference in petrol and diesel needs to stay at the differences as they are now, the diesel should be cheaper than petrol all the time, bet when the noise dies down it will be put up to rip off prices because of the quantity they sell.
    When I contacted the NRMA to ask what they are doing about it they said we have an APP you can use to find where the cheapest fuel is and you can drive there and buy it.
    Then they said if you use Caltex you can get a discount, Caltex is the most expensive fuel in almost al servos they have, We can go to most other servos withing a kilometre of a Caltex and buy it cheaper than Caltex and we don't get a discount, or shopper docket discount, what a joke.
    NRMA is a paper tiger and the government don't give a bugger because of all the excise (tax in other words) and double dip GST tax.
    DO not buy E10 as it is false economy and not cheap enough to make a difference, the Gov't knows we have to buy more because it is not as good as other fuels and damages systems with the water it absorbs especially in short trips.
    BillW41
    26th Jun 2020
    7:48pm
    What about supermarket frozen packet fish - 425g shot up from $5 or less to $10 a packet! Extortionate.
    KSS
    27th Jun 2020
    1:10pm
    So buy fresh then.
    Laura52
    27th Jun 2020
    4:33pm
    Tastes better fresh too and fresh fish can cost less:)
    Laura52
    27th Jun 2020
    6:12am
    And the hoarding has started again in Melbourne, eyes rolling here !
    KSS
    27th Jun 2020
    1:08pm
    Not only in Melbourne. Sydney has caught that virus too even at a socially distant 1500km?
    Laura52
    27th Jun 2020
    4:32pm
    Oh my....just gobsmacked!
    Observer
    29th Jun 2020
    12:31pm
    I believe Coles and Woolies were the worst I had seen.
    Why on earth should the price of toilet paper and paper towels go up during the coronavirus scare? I was standing there watching them stack the shelves before 7am (for pensioners and the vulnerable, etc.) and hiding toilet paper and paper towels after 8am.
    They should be prosecuted for price gouging and making things more difficult during a pandemic.
    BillW41
    29th Jun 2020
    2:19pm
    Fresh or frozen isn't the point, KSS & Laura52!
    Observer
    8th Jul 2020
    4:55am
    Who are these so-called "hoarders"? Do you know anyone who hoards when Covid-19 spikes up again in a State 860km away from us. I don't. From what I've seen with my own eyes the retailers themselves are creating the illusion of "ghost hoarders" so they can increase prices and begin profiteering again, and they've figured out this is hard for the public to prove. Maybe it's a self-preservation tactic to pump up the lost profits caused by Covid-19?


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