There have been people raided and in at least one case arrested for “hoarding” of necessary medical supplies, most notably PPE. What exactly does this mean? Suppose a guy has a business dealing in medical supplies. As part of his business, he is going to obviously have a large quantity of the stuff on hand. Is he “hoarding”? If so, this would seem to imply that it’s currently illegal to deal with (at least these types of) medical supplies at this time. Is this correct? Would that imply that anyone who buys these medical supplies is dealing with a “hoarder” and participating in criminal activity?
And then there’s price gouging. Unlike hoarding, I get the concept here. What I’m wondering is how this is defined from a legal standpoint. How would the government determine the baseline price against which the price gouger’s price is being measured?
Hoarding is not at all difficult to define (you “hoard”, I “stockpile” :)). Price-gouging is a bit like what that Supreme Court justice said about pornography - I know it when I see it.
*"According to the criminal complaint, Singh, who operates a store in Plainview, New York, that mostly sold clothing and shoes before the pandemic, began accumulating the medical supplies in mid-March…
On April 14, postal inspectors searched Singh’s store and warehouse and seized more than 100,000 face masks, 5,000 face shields, 10,000 surgical gowns, 2,500 full-body isolation suits, and more than 500,000 pairs of disposable gloves…
The government alleges Singh’s excessive markups ranged from as much as 99% on N95 masks to 1,328% for three-ply disposable face masks that he purchased for seven cents apiece and then resold at $1 each."*
Note also the organizations this guy took advantage of.
It may be easier to see the distinction by looking at the effects. An established store in the business of selling PPE makes it easier for the people who need PPE to get it: They might have a large inventory, but it turns over rapidly. People getting what they need is a good thing, and so this is allowed.
A hoarder or price-gouger makes it harder for the people who need it to get it: They deliberately buy up more than they can turn over, in order to make people desperate enough that they’ll be willing to pay their inflated prices. So people don’t get what they need, and that’s a bad thing, so we have laws against this.
Isn’t hoarding and gouging sort of the American business way? Corner a market segment and charge what the market will bear?
People complained when Martin Shkreli buying and jacking up the price of a certain drug, but he did nothing illegal and nothing was done about it. I don’t see how the covid-19 situation is any different, except that more people are affected.
I highly doubt this is correct. There’s no way any hoarder or price gouger can individually buy enough medical supplies to impact the price, so unless they’re acting in concert with a national Coalition of Hoarders and Price Gougers - also an extremely unlikely proposition - then that’s not what’s happening.
Price gougers are gambling that the collective impact of shortages or perceived shortages will push the price higher so if they can get a supply cheaply (especially f they buy in advance of the anticipated shortage) they can profit. No one is assuming that they personally can push the prices higher.
I think of price goudging is when two 2 weeks ago in Tampa a gallon of bottled water was, say $1.99 but now that a hurricane is coming that same water is $4.99.
Hoarding is mostly used for irrational behavior, where someone buys up more of something than they personally would be able to use, often out of panic. People aren’t profiting by buying up all of the frozen-food section of a grocery store, and likely don’t even have enough freezer space for what they’re buying, but they’re doing it anyway.
And an individual price gouger might not be able to personally drive up the price of a product, but the cumulative effect of all of them does, and they’re expecting and counting on that cumulative effect.
You’re thinking of an end user. But the guys being described as hoarders in this situation are resellers, as discussed in the OP. For example, the guy who owns the grocery store is not a hoarder even if his frozen food section is more than he can use, obviously.
I don’t think this is true, and the price gouger is just assuming that the prices will rise (or possibly already have risen) for whatever reason, including panic purchases, production or distribution breakdowns, government controls or whatever. The actions of him and his fellow gougers is not up there. But no difference in any event. It’s hard to imagine that the legal definition of a “hoarder” is dependent on some guess as to why he thinks the price will rise (or has risen).
When you shop at Wal-Mart, you are gouging the mom-and-pop stores.
When you shop at Amazon, you are gouging the brick-and-mortar stores.
When you book a reservation on Priceline, you are attempting to gouge the hotel.
I’m not going to throw a tantrum, just because the current supply of toilet paper, and the current demand for toilet paper, don’t line up with my stereotype of the fair market price.
The definition above is obviously pretty squishy (the statute doesn’t seem to define “reasonable demands”).
But, the gentleman in question purchased a very large amount of material, held onto it for a significant amount of time without attempting to sell it, and then only after supply chains began breaking down and prices spiked, he offered it for resale at far above the what the prevailing market price (or at least what the prevailing market price was only a few weeks beforehand) and far above what he himself had paid only a few weeks before. Putting it all together, it does seem like exactly the sort of thing that section of the DPA is intended to outlaw. Again, though, all of that is pretty squishy, which is why, I suspect, it’s so unusual that this individual was actually charged.
Whether such a broad and ill-defined standard as “reasonable demands” is legally enforceable is a different question. Has the Supreme Court or any appellate court actually made a ruling on this section of the DPA?
Just because there is a fuzzy line, doesn’t mean you can never tell what side of the line something’s on. If someone were arrested for accumulating a gallon of hand sanitizer, maybe their lawyer could make a case that that’s “reasonable demand”. When someone fills their whole garage with cases of sanitizer, though, you can’t.
Just because there is a fuzzy line, doesn’t mean you can never tell what side of the line something’s on. If someone were arrested for accumulating a gallon of hand sanitizer, maybe their lawyer could make a case that that’s “reasonable demand”. When someone fills their whole garage with cases of sanitizer, though, you can’t.
I used to work for the parent company of Priceline. It was pitched to airlines as a demand-collection tool: a seat on a plane is expiring inventory…you can’t earn any revenue from that seat once the plane leaves the gate.
The idea was that by auctioning tickets, airlines could get a firm grip on what customers were willing to pay to fly between two pairs of cities.
Let’s say the airlines are charging $367 to fly from San Francisco to NYC. If Priceline customers are routinely bidding $400, then the airline knows they’re leaving money on the table.
The same goes for hotels, which also get burdened with a ton of expiring inventory. And I’d bet folding money that the hotels are using the bids as a variable when setting their rates.
So no, no buyer is “gouging” hotels. The hotels definitely benefit from participating in Priceline auctions. If they didn’t benefit, they wouldn’t participate.
Instead, Priceline and its customers are a bit like the Egyptian plover—the one that cleans crocodiles’ teeth. The buyer and Priceline and the hotel all get something out of the transaction.
ETA: I agree with Chronos. When gouging happens, it’s usually because the seller has tremendous power compared to the buyer.
Well, that’s good. I’m not going to throw a tantrum about that, either.
But, I don’t think that’s what anyone is discussing in this thread.
I don’t have the luxury of working from home. My job is an “essential service”. I have to go into work and interact with other people every day. Not only that, but when I’m in the office, I’m working side by side with phlebotomists who are interacting with the general public, including many sick people, including people who may be Covid-19 positive, and drawing their blood. When I go out of the office, I’m going into hospitals, clinics, and doctors offices, and in contact with front-line doctors and nurses caring for the sick, and with laboratory personnel who are processing infectious disease specimens. And I’m transporting those specimens - not just suspected Covid cases, but specimens that may have even more infectious and dangerous diseases, such as HIV and Hepatitis. And all of us are having trouble obtaining the PPE we need to protect ourselves, each other, patients, and our family.
Now, hoarders and price-gougers aren’t the main driver of the shortages and supply-chain breakdowns I’m personally seeing. But, they sure aren’t helping.
Not only that, but despite the surge in demand for Covid-19 testing, demand for other medical testing and services is way down. Overall, my company’s service volume was down 40%(!) in the last two weeks of March. As a result, despite the fact that we are truly an essential service in a pandemic, our costs vastly exceed our revenues, and as a result of that, I (and literally everyone I work with) have had hours and pay cut. Several of my co-workers have been laid off. Now, the increased cost and difficulty of providing PPE to us is a small part of that cost-revenue imbalance, and hoarding and price-gouging is probaby only driving a small part of that increased cost and difficulty. But, again, they sure aren’t helping.
So, no, I’m not going to throw a tantrum, just because the current supply of toilet paper, and the current demand for toilet paper, don’t line up with my stereotype of the fair market price, either. But, on the other hand, I’m not going to throw a tantrum if the government intervenes to discourge and prosecute hoarding and price-gouging of the PPE I need to protect my health and the health of everyone I come into contact with. I’m also not going to throw a tantrum if that intervention means that the current supply of PPE, and the current demand for PPE, don’t line up with my stereotype of “fair market” extreme price spikes under extreme scarcity.
I think it’s a bit of an open switch regarding business who did not sell the product at all prior to the emergency, but I suspect they will take a “cease and desist now - ask questions later” approach to people opening up shop to sell at prices existing retailers would be barred from asking.
First I’ve heard of this, but nice to see something being done. Having said that, the way I understand the article is that the charges are relating to Shkreli and friends acting and conspiring to block cheaper generic versions of the drug from being made, not for originally cornering the market and jacking up the price - i.e. hoarding and gouging.
As I understand it, patents are only good for a certain amount of time (20 years?) and then generics are allowed to be made and sold, whether the original manufacturer likes it or not. That’s why we now see commercials with men loudly proclaiming that they want brand name Viagra instead of something else.