Michimich.com - Michigan: AG Nessel Files Brief in Support of States' Authority to Regulate Price-gouging

September 25, 2020

LANSING – Michigan Attorney General Dana Nessel joined a bipartisan coalition of 31 states in filing an amicus brief in the U.S. Court of Appeals for the Sixth Circuit to support states' authority to enforce price-gouging regulations to protect consumers during emergencies, such as the COVID-19 pandemic.

In the brief—filed Thursday, the coalition urges the appellate court to overturn the district court's decision in Online Merchants Guild v. Cameron. The court entered a preliminary injunction preventing Kentucky Attorney General Daniel Cameron from enforcing price-gouging regulations against retailers selling products on Amazon. In the brief, the coalition states that national and local emergencies, such as the pandemic, create significant shortages for essential items. State price-gouging laws are essential to ensuring that goods can be fairly allocated among residents, and to preventing bad actors from profiting off residents by charging excessively high prices for goods that are scarce.

"Since the onset of the pandemic, my office's Consumer Protection team has been vigilant in their efforts to protect Michiganders from bad actors seeking to capitalize on their fear and uncertainty," said Nessel. "States cannot afford to have their consumer protection efforts impaired by this federal decision. Therefore, my colleagues and I have filed this brief urging the Sixth Circuit to reverse the decision. States must maintain the ability to go after these bad actors, whether they are online or within the walls of a brick-and-mortar establishment."

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During the COVID-19 pandemic, many states implemented social distancing measures in public places and recommended that residents stay home when possible. As a result, more consumers have turned to online sellers to purchase food, medicine, cleaning supplies and other household essentials. The Online Merchants Guild, claiming that price-gouging laws should not be applied to retailers selling goods on Amazon, filed a lawsuit after the Kentucky Attorney General's office began investigating several Kentucky-based retailers.

The coalition emphasizes that price-gouging laws level the playing field and ensure a more equitable distribution of goods to high- and low-income consumers. The attorneys general state that price-gouging protections have been particularly necessary during the pandemic, which has caused financial instability for millions of Americans and created shortages of essential goods. Furthermore, regulating price-gouging falls under states' responsibility to aid vulnerable consumers during an emergency. Additionally, price-gouging laws do not directly control the price of goods for out-of-state sales or create an actual conflict among state regulations.

States have taken action that has been crucial to curbing price-gouging during the pandemic, including working toward voluntary compliance, issuing subpoenas, sending cease and desist letters, and filing civil actions.

Michigan Attorney General Nessel's office has been active in the price-gouging enforcement arena since her office began receiving complaints in March. Some of the actions the Attorney General's office has taken to address price-gouging include the following:

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Sent a cease and desist letter in mid-March to Menards after the Attorney General's office received 18 complaints from consumers about face masks, bleach and other products being sold at high prices.
Took action against several businesses based in Michigan and others operating in Amazon's online marketplace that were offering products like face masks and hand sanitizer at high prices to consumers.
Supported a bipartisan package of legislation introduced in the Michigan Legislature that would add price-gouging protections during an emergency declaration or a market disruption.

The coalition is asking the appellate court to reverse the district court's order granting injunctive relief.

Attorney General Nessel joins the attorneys general of Alaska, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Idaho, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, Virginia, Washington, and Wisconsin in filing the amicus brief.

A copy of the brief is available here.

Filed Under: Government, State

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