Federal appeals court says Kentucky may enforce price gouging law against sellers on Amazon
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Federal appeals court says Kentucky may enforce price gouging law against sellers on Amazon

The US Court of Appeals for the Sixth Circuit concluded Thursday that Kentucky may enforce price gouging laws against sellers on Amazon, overturning a district court preliminary injunction.

Price gouging is the practice of unfairly and dramatically increasing the price of a commodity during spikes in demand. Reports of such activity have risen since the onset of the COVID-19 pandemic.

“Commonwealth’s price-gouging laws exist to protect Kentuckians from bad actors,” Kentucky Attorney General Daniel Cameron said in response to the ruling and added that his office saw “markups of up to nearly 2,000 percent from online third-party sellers for products such as masks and hand sanitizer.”

Pursuant to Kentucky law, when the governor or US Department of Homeland Security declares a state of emergency, individuals are prohibited from selling emergency supplies “for a price which is grossly in excess of the price prior to the declaration and unrelated to any increased cost to the seller.” Additionally, a second relevant statute in this case prohibits misleading trade conduct.

In March of 2020, Cameron issued subpoenas to Amazon sellers engaging in potential price gouging activity, including one who was selling hand sanitizer and respirators during the onset of the COVID-19 pandemic. The seller refused to comply and ultimately obtained injunctive relief against the application of Kentucky price-gouging statutes.

Vacating the lower court judgment and analyzing the statutes through the four-part injunctive relief test, the sixth circuit found that the laws are likely constitutional, and the state of Kentucky would be irreparably harmed by being unable to enforce the statutes.

“It’s important that we have the legal tools necessary to ensure Kentucky’s price gouging laws are followed,” Cameron said in his remarks.

The plaintiffs have the option to appeal the sixth circuit ruling.