News National It isn’t illegal to rip off Australians in a crisis. But that soon may change

It isn’t illegal to rip off Australians in a crisis. But that soon may change

There are growing calls to make it illegal to sell essentials at sky-high prices during crises. Photo: TND
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Most Australians would find it unconscionable to hike up the price of essential items by more than 10 times their worth during a pandemic.

But for a select few individuals and businesses, it is an opportunity.

And the worst part? Price gouging isn’t illegal.

But there is a growing movement for that to change.

More than 27,000 Australians have backed calls by Choice consumer advocacy group to make price gouging against the law.

In a letter to NSW Minister for Better Regulation and Innovation Kevin Anderson, Choice proposed draft legislation that would make it illegal for “rogue sellers” or companies to sell essential items for more than 120 per cent of the original price during emergencies.

The consumer advocate is engaging every Australian state and territory to do the same.

“Through our social media and other channels we’ve heard about face masks being sold for 10 or 20 times their regular price, hand sanitiser prices doubling, chest freezers more than quadrupling in price, and staples like potatoes suddenly becoming very expensive. And that’s just the very short list,” Choice said in a statement.

The letter comes after a slew of companies and individuals attempted to exploit people’s anxieties about COVID-19 by selling sought-after items like toilet paper and hand sanitiser for exorbitant prices during the peak of panic-buying.

Quilton toilet paper rolls, usually sold for $12, have been advertised for nearly three times the price at $34.95. Photo: Choice

In one instance, an online seller was caught offer to sell 48 rolls of toilet paper for $652, while another was spotted trying to sell a 250ml bottle of antiseptic disinfectant liquid for $44.90.

This week, online retailer Kogan sparked controversy after it was revealed the company was planning to award millions of dollars worth of incentives to its top two executives as coronavirus-driven sales soar.

The generous bonus for its executives came as questions surrounded Kogan’s alleged price gouging of products during the pandemic.

“The current COVID-19 pandemic has provided many examples of NSW businesses and the community effectively working together during a very difficult time,” Choice policy and campaigns advisor Amy Pereira wrote to the minister.

“Unfortunately, there have also been many examples of the worst forms of business behaviour, when rogue sellers profit off the community’s fear and uncertainty.

“There is a simple solution to ending the practice of profiteering in a crisis: A law that makes price gouging on essential goods illegal.”

Mr Andrews confirmed to The New Daily he had received Ms Pereira’s letter, but stopped short of supporting the proposed legislation.

“Whilst the vast majority of NSW businesses are doing the right thing, there are some looking to profit from the pandemic and I will not hesitate to use my powers under the Fair Trading Act to issue a public warning about dealing with those businesses,” Mr Andrews said.

He urged Australians to report any retailers suspected of taking advantage of the coronavirus crisis to Fair Trading.

Crisis mode

In March, federal Health Minister Greg Hunt was forced to use emergency powers to invoke biosecurity laws to stop items like medical masks from being sold at excessive prices or sent offshore.

It came after Chinese property development group Greenland was discovered to be shipping bulk supplies of Australian surgical masks, thermometers, antibacterial wipes, hand sanitisers, gloves and Panadol to China through January and February.

The federal laws mean those who sell essential goods at a mark-up of 120 per cent or more face fines of $63,000 or five years in jail if they do not hand over the items to law enforcement.

Surrendered goods go into the national stockpile.

Speaking to The New Daily, Ms Pereira said Choice’s proposed law was based on the Commonwealth emergency legislation and would apply in future crises – not just the coronavirus pandemic.

“In any type of crisis, we need laws that protect consumers because it has flow-on effects, particularly to our most vulnerable like the elderly or people on low incomes,” she said.

We don’t want people to get the idea they can make a quick buck at the expense of the community.

“And it’s not just toilet paper – we’re also talking about baby formula, medicine, PPE, and other things that should be protected in a crisis.”

Why isn’t price gouging illegal?

Before the coronavirus pandemic, “really serious and highly objectionable price gouging” hadn’t been a major issue, according to Allan Fels, former chair of the Australian Competition and Consumer Commission (ACCC).

“There’s always been price gouging, but governments – for good or bad reasons under the influence of business lobby groups – have not had a price gouge power,” Professor Fels told The New Daily. 

He said the price surveillance powers we have today had “many limitations” and were mainly designed for big business price restraint, rather than individuals trying to make an easy dollar.

“Arguably the special circumstances now might warrant taking a look at the price gouging that’s occurring. The Commonwealth legislation may need supplementing,” Professor Fels said.

But he also said it was important to do some digging before accusing a company or individual of intentionally trying to exploit shoppers.

“Sometimes the person found to be charging the high price is not the true culprit,” Professor Fels said.

“They may have had to purchase it from someone earlier in the supply chain who is charging the high price.”