eBay still has major problems with price gouging on baby formula, despite pressure from the public and regulatory bodies.
MSRP for a 6 back of Enfamil Gentlease 12.4 oz cans should be ~$100. Not only is this listing double that price, the seller appears to be engaging in the specialty services fraud/scam that is running amok on the platform as well.
The way the scam works is unscrupulous sellers purposely list items in eBay's specialty services categories which are not covered by eBay's Money Back Guarantee program.
That means when the seller never ships, the buyer is not able to open an Item Not Received claim to get their money back - and that appears to be exactly what happened to at least one buyer.
Looking at sold history, this one seller has sold over $4,000 worth of baby formula on eBay just in the month of June alone - all at significantly higher than retail prices. 🤯
It's well past time for the FTC to do more than "encourage" eBay to do the right thing here - if they are not inclined to do so voluntarily, maybe a large fine will drive the point home.
The FTC is being asked to do more to "encourage" online marketplaces like eBay, Facebook and Amazon to do more to stop price gouging on baby formula.
The FTC launched an inquiry into the formula shortage in May. The advisory for online marketplaces such as eBay, Facebook and Amazon would help complement the ongoing work being done to address the supply issue, the Democrats said.
“While the steps outlined in the FTC’s announcement last month are encouraging, we request that the FTC additionally emphasize that online marketplaces can and should make efforts to protect users from price gougers and scammers. There are common-sense measures that online marketplaces can take to prevent fraud and unfair business practices, and it should not be solely the burden of consumers to uncover such deception,” they wrote.
"...it should not be solely the burden of consumers to uncover such deception" - I couldn't have said it better myself. 👏👏👏
The FTC is investigating the infant formula shortage and says it will use the full force of the law against anyone found to be scamming families trying to buy formula, including through online bots that automatically purchase & resell formula at exorbitant prices.
As part of the investigation, FTC is seeking public comment on the issue, including but not limited to:
- Fraud, deception, or scams when trying to buy formula
- Families being forced to purchase infant formula from online resellers at exorbitant prices
- Retailers’ experiences with extremely large purchases of infant formula in excess of a single family’s needs for the purpose of long-term stockpiling or resale;
Tell the FTC about your experiences with online price gouging of baby formula here.
eBay has taken a small step on this issue by adding a banner with a link to report price gouging when you search for baby formula. However, that's not nearly enough in my opinion.
First, it's still putting the responsibility on users to report listings for manual review rather than using those automated systems they say they so successfully used to block price gouging listings last year.
Secondly, the banner doesn't come up all the time - I only got it for more general searching like "baby formula" of "Enfamil" but it did not come up on a more specific search like "Enfamil Neuropro" or "Enfamil Gentlease."
You can absolutely bet the parents who are hit hardest by this (those who need a specific type of formula due to allergies or sensitivities) are using very specific search terms, so at the very least eBay needs to make sure that banner shows on specific as well as general searches.
And last but not least - it's clearly just a PR move to cover eBay's...you know what.
In my testing, there are still many listings that are price gouging. For example, a 12.5 oz can of Enfamil Gentlease should be ~$18.99 according to the manufacturer, so 2 cans should be ~$38, but the very first search result that came up is at $100 with shipping.
eBay can and must do more to stop the price gouging on baby formula during this current supply crisis and beyond.
I asked whether eBay is planning to enable the same proactive, automated systems they used during peak pandemic for the current infant formula supply shortage in the weekly eBay community chat today.
No response from eBay staff yet, though to be fair, it would probably be smart of them to run this one by legal first. I've also reached out to eBay's media contact and will report back if I receive an official statement.
Parents across the country are facing an infant formula crisis with a reported 40-50% of products currently out of stock due to lingering supply chain pressure made worse by a massive formula recall in February.
As with many other essential products during the pandemic, the situation is ripe for price gouging and profiteering - especially on eBay.
The manufacturer of Ashley Hernandez’s preferred baby formula for her two girls said it was out of stock on its website. Listings on eBay showed it would cost her up to $120 for a single can.
'We've called the WIC office,' Bradford told WTVR. 'We've called Thrive, which is a supply company. We've called every hospital system in the state. I've contacted personally, every Kroger, Walgreens, Walmart and CVS within the tri-cities area.'
She noted she found eight cans of the formula the child needs on eBay, but it's being sold for $800. The cans typically cost between $43 and $47.
Just in a quick search on eBay, I found many examples including this one for a 12.4 oz. can of Enfamil Gentlease which normally sells for $18.99 from the manufacturer that is listed at $89.99 + $9.95 shipping.
Awfully nice for eBay to offer special financing options though - at these prices, parents might need it!
Or a 6 pack that normally goes for $100.25, listed at $244.50 with shipping.
Obviously eBay is not the only place where price gouging may be occurring during the current baby formula crisis, so why am I focusing on them specifically?
Because I believe there should be accountability and responsibility for what is happening on their platform - especially after the big public show they made out of removing price gouging and prohibited items during the peak of the pandemic.
What is eBay's price gouging policy?
Offering items at a price higher than is considered fair or reasonable is not allowed on eBay.
eBay is an important source of goods for buyers during emergencies and when supply chains are disrupted. Sellers offering essential items must offer them at reasonable prices, and may not attempt to unreasonably profit from increased demand or decreased supply caused by emergencies or disasters.
What is the policy?
- Items that are considered essential must be offered at a reasonable price
- Inflating the price of goods in response to an emergency or disaster is not allowed
- eBay may restrict the sale of items that are susceptible to price gouging behavior - for example, by only allowing items to be sold by authorized sellers
- Sellers must follow all applicable laws and regulations that apply to the sale of their items
Excerpts from eBay's March 26, 2020 press release regarding steps taken to actively remove price gouging and prohibited items from the marketplace (emphasis mine).
Editor’s note: We have a zero-tolerance policy on price gouging on our marketplace to ensure buyers are able to find essential items at reasonable prices. As of August 2021, eBay has removed or blocked 85+ million listings in violation of policies related to COVID, including price-gouging and false medical claims.
...This week, we expanded the restricted items list to include toilet paper, baby formula and baby wipes, tampons and diapers, which will only be permitted for sale by business sellers in a fixed price format...
How We’re Removing Prohibited Items
We use a rules-based filtering system with algorithms that identify and block prohibited items and have a team of customer service agents dedicated to round-the-clock manual review to remove any listings not caught by our tools. The manual reviews include removing all listings for certain items, like masks and sanitizers; products with inflated prices; and products making false health claims, including test kits.
If eBay can supposedly automatically block 85+ million listings violating price gouging/prohibited items policies during peak pandemic when the site was flooded with massive amounts of listings, there is absolutely no excuse for not deploying the same systems now.