Price-gouging: Cashing in on coronavirus

When the price isn't right.

Customer and cashier making a payment in a pharmacy.

When $50 bottles of hand sanitiser began appearing on Trade Me, the website was quick to dismiss calls to clamp down on sellers, claiming it was just supply and demand in action.

That’s not what we’d call it. In our book, it’s price-gouging.

After coming under flak for its stance, Trade Me had a change of heart and said it would pull items from sale where sellers were engaging in this type of behaviour.

Unfortunately, there appears to be other traders trying to make hay out of the pandemic. This week, we’ve had reports from consumers about face masks advertised for more than four times their usual price and hand sanitiser for as much as $150 a litre.

Not surprisingly, much of this behaviour has been seen online where unscrupulous traders have more opportunity to hawk their wares. These hucksters come out of the woodwork whenever public health emergencies or natural disasters provide an opportunity to make a buck by preying on consumers’ concerns.

Along with inflated prices, there’s also been the usual raft of products making unfounded claims about their health benefits.

Teas, essential oils and colloidal silver are among products touted as treatments for coronavirus.

One US website, herbalamy.com, was selling tea and other herbal concoctions it claimed would prevent you getting the disease. “All the herbs are specific in one way or another for this virus. A number of the herbs are strongly antiviral for coronaviruses,” it claimed.

Not to be outdone, coronavirusdefence.com recommended its “boneset tea” six times a day as a treatment if you contracted the disease. According to the company, the tea was effective for “coronavirus infections, including SARS”.

Both traders have received warning letters from the US Federal Trade Commission telling them to drop the claims.

Our experience tells us it’s probably too much to expect this sort of behaviour to stop anytime soon.

Over the coming weeks, we’ll be keeping a close watch on the market to identify companies that are trying to exploit consumers, whether it’s by hyping products with no benefits or inflating prices.

While price-gouging isn’t illegal – we think it should be – it’s illegal to mislead consumers about the reasons why prices are going up and the purported benefits of a product. Where those reasons aren’t genuine, companies will be breaching the Fair Trading Act and face a fine of up to $600,000.

What you can do

If you spot a trader doing the wrong thing, let us know. Email us at info@consumer.org.nz with:

  • details of the product, the price and/or claims made (a photo would be great)
  • the name and location of the store (or the website address if you found the product online).

If you think the trader is making a misleading claim, you can also complain to the Commerce Commission – comcom.govt.nz.

Coronavirus (Covid-19)

Coronavirus (Covid-19)

Crowd of people walking.

Coronavirus (Covid-19)

Read our latest articles on the Covid-19 pandemic. Got a consumer-related question about coronavirus? Email us at info@consumer.org.nz and we'll do our best to help.

Member comments

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Lawrence A.
04 Apr 2020
Supermarkets Ripping Us Off

It’s funny how we all know what is going on with the supermarket. The duopoly is ripping us and the suppliers off, we have some of the highest food prices in the world. However successive governments are unable or unwilling to do anything about it. We get given excuses like it’s the transport costs or seasonal differences. We need other players in the market like Aldi or Lidl which discount heavily to keep their customer base.

Peter A.
30 Mar 2020
Supermarkets

As Countdown which is a subsidiary of Woolworths Australia gouges the general population of both countries there will be a corresponding jump in company profits
Prices in Countdown are controlled from Head Office in Favona Rd Auckland by Category Managers so all stores have the same price for an item
Foodstuffs which operates New World Pak n Sav 4 Square can have different prices in each of the stores as they are individually owned as each is a franchise and the owner can charge what they feel like even though there is a base price indicated from Head Office
Amazing how both outfits which are a duopoly have convinced the government to make them the only food outlets which only concentrates the population to go to these stores and increases the risk of transfer of Covid-19
Even items that are plentiful e.g. most fruit and vege have been pumped to the highest price
The individually owned New World and Pak n Sav owners wanted to not pay loyal low paid staff that did not turn up. this just increases the owners Nett profit for personal gain. These stores turnover millions per week but are not socially responsible
The markup per item is always 60% on Gross Profit and sometimes up to 300%
When there is a special on Neither company in this food Duopoly gives the discount. the discount comes from the supplier and these outfits demand the special or will refuse to accept the product in future.
The price reduction offered by the supplier does not have to be passed so gives these business operators even greater profit
they are the gate keepers and use their power to drive down supplier prices and increase the price that the consumer pays and always keep the healthy margin between the two
When was the last time that any one of these stores filed for bankruptcy?

Peter M.
31 Mar 2020
Consumer OUR watch dog

Consumer should draw the Prime Minister's attention to this disgraceful practices going on at ALL supermarkets. Shut them down and let the small businesses have a fair go. We had a green grocer in Christchurch Who was proposing to FREE delivery on orders over $30.

Margaret B.
29 Mar 2020
Countdown

My local produce shop has had to shut down, no doubt the supermarkets arranged for that. I had a look at prices on the Countdown website as that is the only place for online shopping. Most were 50% higher or more than I paid at my local shop. A swede was $4.50, which is ridiculous as you can buy them from a stall at $1 if you were allowed to. They are certainly making the most of a monopoly situation. People on super will not be able to afford these prices and will go hungry.

J W.
29 Mar 2020
Name & shame is the only avenue

Since there is no effective market watchdog (with teeth) in NZ, public naming and shaming is the only consumer response. Consumer is in a position to collate and phblish specific user findings and report summarised findings to the media.

lincoln c.
29 Mar 2020
Stuff Countdown, I'm now going to Pak N Save

I too noticed price gouging by Countdown during my last shop. Parsley went from $2.50 to $3. Tomatoes went from $3.50 to $4. Cucumbers shot from $2 to $3.50. And so on. Whilst my examples could be deemed "seasonality" and cucumbers likely is so, my instant thought re parsley and tomatoes was they are gouging. So I'm off to PnS wherever possible from now on. If we all do the same, collectively we can keep them honest. This elephant never forgets!

Nigel W.
28 Mar 2020
Supermarkets...

I have to agree with what is written here. I completed a shop just before the lockdown and what would have normally been a $200 shop was suddenly a $300 shop. This was also at Countdown. This is unforgivable given that the supermarkets have been placed in the trusted position of being an essential public service. Just as those that step up during times like this should be rewarded, I just hope anyone trying to profit from this emergency gets their comeuppance.

Glenda T.
28 Mar 2020
Taking advantage of their position

I am disgusted with Countdown using their position to take advantage of people under stress.
Maybe they should be closed down and the little suppliers given a chance?

Gerard H.
28 Mar 2020
This is the biggest consumer rip-off in years - Consumer needs to tackle it upfront

This is from Consumers own supermarket price survey:
"Red flags promising discount deals and super savings have become the new normal in supermarket aisles. Special offers are so pervasive that more than half the products in our latest supermarket price survey were regularly on promotion."

So if Supermarkets have ceased specials then they have put up prices on over half of the normal grocery items. How is that not "price gouging" in a crisis? If the specials system is too difficult to keep in place then they can reduce prices across the board to maintain the same profit levels.

Also yet to hear of any supermarket offering to share any of massive profits they are racking up with their low paid workers (who are literally risking their lives to keep the rest of us supplied).

Helen K.
28 Mar 2020
Supermarkets Too...

I was shocked to go into Countdown in Masterton to find every single one of their yellow 'special' cards completely gone and everything was priced at the highest amount. I had purchased a brand of ice cream cones two weeks in a row, marked as 'clearance' with a long use by date on them. They were priced at $2.
This week the clearance sign had gone and they were now over $4 - why?
I saw toilet rolls, a good sized pack, priced at $11! I can't ever remember seeing loo rolls at that price before.
This is certainly taking advantage of their customers and disgusting.
My view of Countdown has certainly gone right down.

Heather B.
28 Mar 2020
Blenheim too.

My friend in Blenheim said things she has bought regularly for months have increased by $1 or more. If I find that is the case where I am I will change my store and I hope others that can do also.

Adelle M.
29 Mar 2020
Rangiora too

I experienced the same at Rangiora Countdown. No specials at all. They are in the very privileged position of still being able to trade, which makes this cynical response totally immoral. Definitely time to try other Supermarkets.