The Rise of Lawsuits
The pandemic seems to show no signs of letting off, and people are seeking help in any way they can, especially in legal matters.
Lawsuits have been filed ever since the coronavirus has spread, and it covers price-gouging, insurance for business interruption, impact on employees, and a lot more.
Consumers have also had issues financially as business refuses to refund concert tickets, theme park passes, airfare, and vacation plans that were unexpectedly canceled because of the coronavirus.
Here are just some major issues people had to contend with because of the pandemic.
Price Gouging Because of COVID-19
The pandemic’s start was the start of several businesses and people taking advantage of the sudden surge of demand for particular items, raising their prices too high.
Consumers began accusing retailers of unfair price gouging. The following are some price gouging lawsuits that happened and may still be ongoing.
Man Is Sued by the State of Alaska for Profiteering During COVID-19
Juan Lyle Aeune, a resident of Anchorage, Alaska, bought almost thousands of masks for COVID-19 and sold them at a higher profit.
The state of Alaska sees this as an illegal attempt to profit from the pandemic.
There were claims where Aune was found to have worked under the name Spazzylab, but he never had a business license.
The lawsuit filed against his company is a sole proprietorship. He is reportedly selling online on Amazon and eBay.
The state of Alaska alleges Aune participated in unfair profiteering, which began in February 2020, and that he bought thousands of COVID-19 masks from retailers over the state and resold them on Amazon and eBay with a high markup.
Further allegations point to Aune purchasing masks from several stores, which includes Lowe’s, Home Depot, and Spenard Builders Supplies; he bought the masks in packs of 20 between $17 and $23 and would end up getting profits to about $50 for each pack.
Alaska cited one incident as an example. On February 25, 2020, Aune visited a Lowe’s Anchorage store and bought all the N95 respirators.
He allegedly bought 293 packs of N95 respirators at 20 pieces each. Each pack came out as $21.98 for each pack of 20s.
There were claims that Aune was heard to have bragged to a Lowe’s employee that he can flip the masks at a good profit.
The Alaskan state also alleges that Aune sold a lot of masks on his Amazon and eBay store, which included 3M 8210 particulate respirators.
He allegedly sold 477 packs of 20 3M N95 respirators between February 10, 2020, and March 16, 2020.
The state claims that Aune sold the masks at a staggering price of $89.25.
The price was way above average, and the lawsuit also stresses its difference from Amazon’s average price for the masks between December 19, 2019, to January 19, 2020, at around $16.
Aside from the N95 masks, the state also says that Aune sold different masks on eBay and has continued to raise the prices of the masks.
He was reportedly selling each of the N95 packs of the 20s for $59.99 on February 22, 2020, but by February 29, the price went up to $89.99.
Aune’s way of selling was clearly a way to take advantage of the public who wanted to only protect themselves during the pandemic.
It is seen as unethical and immoral, and that it violates the very fundamentals of fairness.
The Alaskan state also cited that Aune’s actions resulted in a shortage of masks in local stores, putting people who can’t buy them at risk and taking advantage of the people who can buy them but are unaware of the actual price.
The lawsuit wants to make sure that Aune is punished for each online post or ad published online to make a sale and that each action be a separate violation of the Unfair Trade Practices Act (UTPA)
The lawsuit is asking for fines for each violation of the UTPA, costing between $1,000 to $25,000.
The respirator price lawsuit has made headlines all throughout Alaska, which prompted a bill to be passed by the legislature to make price hikes over 10% to be illegal.
Amazon Seller Posting High Prices for Fake N95 Masks According To 3M
There are people who won’t shy away from making a quick buck, no matter where it may come from, but there are individuals who will fight back.
One such scenario is a recent trademark lawsuit filed by 3M vs. an Amazon seller who was allegedly selling fake N95 respirators at abnormally high prices.
The real manufacturers of the N95 masks are now trying to take the seller to court for trademark infringing, but also in taking advantage of vulnerable people in dire straits because of the pandemic.
3M, a company based in Minnesota, owns a trademark on N95 masks. Due to the pandemic, the demand for respirators has increased twofold.
But there are companies, such as KM Brothers Inc. KMJ Trading Inc. and Supreme Sunrise Inc. selling fake N95 masks.
As the coronavirus spread, the demand for respirators, especially 3M’s N95 filtration masks, went up ever since the pandemic started.
The masks are known for their great air filtration technology and effectiveness and are now a standard to help people be protected against the coronavirus.
3M claims that because of the increased demand for the respirators, the supply couldn’t keep up, which left healthcare workers and other people trying to get the masks for their use.
Due to the quality of these masks thanks to their manufacturers, sellers took advantage of the situation and tried to sell off fake N95 masks on Amazon, ultimately misleading people to believe that they are the real thing.
This scenario hurts not only just the company, the customers but also the public.
3M explains people rely heavily on these masks because of their effectiveness, and since non-95 masks cannot provide the same protection as the N95 masks.
With sellers charging more for the masks, it financially hurts people, as they will be forced to buy masks at exorbitant prices, but they won’t be unfortunately protected from the pandemic because they are purchasing the fake masks.
3M alleges that KM Brothers Inc., KMJ Trading Inc., Supreme Sunrise Inc, and other sellers have tagged the price for the fake masks at over $350,000 in total, along with other respirators.
The practice of selling fake masks takes a great toll on 3M directly and indirectly.
The sale of the fake N95 masks directs customers to buy from the fake sellers and ultimately tarnishes 3M’s reputation.
The lawsuit reports that with the fake masks flooding the market with low-quality products passing off as the real ones, people are being misled to believe that 3M products are unreliable.
3M is then asking the court to force the fake masks sellers to give up their profits from the sale of the fake N95 masks and request an injunction stopping them from continually misleading people.
The company also seeks monetary rewards, which 3M promises will be donated to COVID-19 relief efforts.
This lawsuit is not the first one that is being pursued by 3M during the pandemic. 3M also took sellers to court for selling real N95 masks at high prices, while this new trademark lawsuit is different.
What happened in both cases was that 3M admonished the sellers for taking advantage of the pandemic and desperation just to make a quick buck.
Class Action Lawsuit vs Amazon Claims Unfair Price Hikes
Amazon is one of the leading online retailers right now, but a class action lawsuit has been filed recently against them, claiming they are taking unfair advantage of their customers during the pandemic.
Victoria Ballinger and Mary McQueen, both California residents, filed the lawsuit. They purchased products on Amazon as soon as they put California in a state of emergency because of the pandemic.
Ordering online was better than going to a brick-and-mortar store, as it means they will have less exposure to the virus.
But the prices on Amazon were way above the normal price for important household items.
Ballinger purchased a Mary Kay TimeWise 3-in-1 Facial Cleanser at $14.47, which was normally bought at about $9.60, which was over 50% higher than the normal.
While McQueen bought a Sally Hanson Hair Kit, usually bought at $4.75 at a physical store, but Amazon’s price was at $6.74.
Some people somewhat understood that because of the pandemic, there is less supply for essential products as people wanted to stock up on goods and other safety items as they were increasing in demand because of the virus.
According to the lawsuit, Amazon’s place in the current market has only increased as people at home around the country order online, as they are forced to remain at home.
The lawsuit alleges that as an online retailer, Amazon seems to have taken advantage of the low supply of some products in physical stores and the people’s inability to leave their homes.
When people turn to online sites to get what they need, Amazon’s sales increase, but Amazon took advantage of the situation by making essential products available at abnormally high prices, raising prices to over 1,000%.
Face respirators, pain relievers, cold remedies, black beans, and flour are just products whose prices have risen during the pandemic.
These are also the items that showed a perfect example of a price hike, such as cold remedies going up 674% from $4.65 to $35.99.
In California, the law prohibits price hikes of over 10%, especially in a national emergency.
The lawsuit also explains that California’s Unfair Competition Law prevents customers from being overcharged for essential goods in emergency conditions.
To explain further how the price hikes are implemented, McQueen and Ballinger mention that as Amazon is an online site where sellers can post their wares, they are considered a third-party seller, even though the retailers also sell the products directly to people.
According to Amazon users, both kinds of items have seen excessive price hikes.
With the items sold by third-parties, claims point to Amazon controlling the sale of the items, and the profits they rake in are enormous.
What aggravates the situation is that there are a lot of advertisements from Amazon where they say it helps to stop unfair price hikes by third-party suppliers, but in the customer’s eyes, they are a major offender.
Another price gouging lawsuit filed against Amazon was in relation to the online retailer giant’s charging of exorbitant prices on basic goods.
A Florida resident, Stephanie Armas, sued Amazon, as she claims Amazon has charged her abnormally high prices for toilet paper and hand sanitizers for her family.
For a 36-pack of toilet paper, she was charged $99, and for two 1-liter hand sanitizer bottles, she was charged $199.
These prices were so different from the normal price range for toilet paper and hand sanitizers, as the usual price for a roll was $1, and sanitizers were around $7 and $8 per liter.
When Armas filed her complaint, COVID-19 has spread to 104 countries, and there were 109,000 confirmed cases and over 3,00 deaths.
With Amazon’s abnormally high prices, Armas claims they are not reasonable.
They are also illegal under Florida law during a state of emergency, which Florida Governor Ron DeSantis announced on March 9.
The declaration of the state of emergency in Florida adds protection for consumers based on Florida law, where retailers should not charge exorbitant prices for goods or services in the event of a state of emergency.
Armas alleges Amazon has violated these very laws because of the prices they set for the basic goods.
Price Gouging Lawsuit Filed Against Albertsons
Albertsons has recently received complaints about preying on people during the pandemic by unfairly hiking up prices for basic goods and items that they can use to protect themselves.
Eleisha Redmond, a resident of California, claims that Albertsons engaged in price gouging even though the practice is illegal in most states. A major retailer should have been aware of the restrictions.
Redmond also points out that Albertsons has violated California law by profiteering from consumers who were desperate since the start of the pandemic.
The lawsuit also states that as California has implemented strict measures to fight price gouging in the event of a pandemic, the practice is a criminal offense under the state’s consumer protection laws.
Redmond also pointed out that once a state of emergency is implemented in a location, retailers could not post more than 10% markup on certain foods.
- Consumer items
- Medical products
- Emergency supplies
In her case, Redmond cited an event of profiteering at a Safeway store, which is also owned by Albertsons Company Inc., where the price of the toilet paper went up from $10 and $11 to $18.99 in April 2020.
The lawsuit also claims that the price increase was not because of any outside costs felt by the retailer.
The plaintiff alleges that the price gouging was solely to profit unfairly from the consumer during the pandemic.
eBay Facing Price Gouging Allegations
A resident of California alleges eBay pushes its sellers to engage in price gouging on basic items during the pandemic.
Jeannette Mercado of Orange County, California, shopped online on eBay on March 14, 2020, for N95 masks.
She purchased a two-pack for $23.98, although the retail price was only around $8.99 at Brick and Mortar retailers, which puts the eBay price at a 300% markup.
The eBay lawsuit states that eBay is one of the largest online retailers in the market today, with over 1 billion listings auctioned.
To discourage unfair profiteering, California law prevents price hikes of particular goods and services, like medical supplies and goods, by more than 10% within a month that an emergency has been declared.
That would show that eBay’s price protections started on February 3 after Santa Clara County implemented California’s first state of emergency when the pandemic started.
From that point onward, eBay increasing prices to over 10% was to be considered unlawful.
California Governor Gavin Newsom implemented a statewide emergency on March 6, and the federal government followed up with a national state of emergency by March 13.
California law does allow for a month after each emergency implementation, but the governor did extend the price-gouging prohibition for California to last till September 4.
But according to allegations, there were enough incidents on the eBay site in April and May, where a three-pack of N95 respirators went for $585 and a 12-pack toilet paper for $49.90.
eBay did announce that it did not allow the auction of essential items to stop sellers from using the site for unfair profiteering, also starting a tool where people can report unfair price hikes on eBay.
Although the lawsuit deems the procedures ineffectual and pre-textual.
The lawsuit insists that eBay’s business model itself gives encouragement to unfair price hiking.
Aside from additional charges for listing the items, there’s a final fee when the items actually sell, which is a percentage of how much the items sell. That points to a higher sale, the more eBay profits.
Also, even with eBay’s implementation of its ban on price hikes on essential items, there are still items being auctioned off for abnormally high prices.
The lawsuit also claims unjust enrichment and clear violations against California’s Unfair Competition Law and Consumer Legal Remedies Act.
A similar lawsuit was also filed against a business that was buying a lot of N95 respirators and selling them on eBay at abnormally high prices
Ohio Attorney General Dave Yost filed a lawsuit against Donkey476, an eBay seller who started listing on the site on March 28, 2020.
Yost alleges that Donkey476 sold about 15 packages of 10 N95 masks at around $360 to $375, which had an average price of $36.34 for each mask.
But the average retail price for the masks ranges from $1.75 to $2.35 for each mask.
Health agencies and government groups have asked Donkey476 to stop selling the masks at such exorbitant prices, but the seller continued to hold the masks hostage with a price that is 1,700% more than the normal.
N95 respirators are short in supply worldwide, as even the US Department of Health and Human Services already sent out a Notice of Designation that identifies the N95 masks as a scarce product because of the pandemic.
But even with this designation, Yost notes that Donkey476 has gotten a large stock of N95 masks during the crisis and demanded people to pay abnormally high prices.
Donkey476’s actions, according to the lawsuit, have also denied people reasonable access to N95 masks, especially for Ohio’s first responders and healthcare workers.
Yost insists that because people cannot buy N95 masks at a regular retail price, healthcare personnel are put in danger as they do not have enough protection.
The plaintiff notes that the defendant is in direct violation of the Valentine Act, as his actions can be deemed a direct threat to the health, safety, and well-being of the general public.
The defendant is also in violation of Ohio’s Consumer Sales Practices Act, which stops the unfair and deceptive acts and practices of people who supply goods to others.
Yost is asking the court for a temporary restraining order to prevent the defendant from getting more N95 respirators in bulk that exceeds a personal need for a period of a month.
Yost is also requesting the court to tell Donkey476 to stop selling or disposing of the masks they currently have in stock without any court approval.
The attorney general is also asking for a permanent injunction to be applied to require the defendant to forfeit all the masks in their stock to be given to the people who need them the most.
Loan Fraud Charges Filed Against Love & Hip Hop Star Among Others
Along with the issues of unfair profiteering, loan fraud is another problem that people have to contend with during the pandemic.
Diamond Blue Smith, a member of Pretty Ricky, and Tonye C. Johnson reportedly face charges of wire fraud, bank fraud, and conspiracy to commit wire and bank fraud.
The defendant’s actions seemed to be part of a bigger scheme to file fraudulent applications amounting to over $24 million in Paycheck Protection Program (PPP) loans that are guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
According to allegations, Smith falsified paperwork to get a PPP loan of $426,717 for his company Throwbackjersey.com LLC.
He also did the same for his other company, getting a PPP loan of $708,065 for Blue Star Records, LLC.
The Justice Department alleges that Smith used the funds to purchase a Ferrari amounting to $96,000 and withdrew $271,805 in loan proceeds. He also looked to file PPP loans on behalf of others so he can get kickbacks.
In Johnson’s case, he committed loan fraud to get a PPP loan amounting to $389627 for his Synergy Towing & Transport LLC company.
Upon closer look at Johnson’s PPP loan application’s details, the IP address associated with his submission in mid-May was linked to a Broward County Florida residence of a loan fraud co-conspirator, now cooperating with the investigation.
What was included in the application package was a Synergy bank statement and Form 941 for each quarter of 2019.
Law enforcement was already on the case, following text messages sent between Johnson and Phillip J. Augustin of Coral Springs, Florida.
According to the Justice Department, Augustin was charged in July 2020 with wire fraud, bank fraud, and conspiracy to commit wire fraud and bank fraud along with obstruction in conjunction with the loan fraud scheme.
Text messages also show that Augustin asked Johnson to send screenshots of emails Johnson received from the bank processor about the loan application.
He then allegedly sent a text back to Johnson advising him on how to send a kickback payment to another conspirator, which Johnson wrote out a $97,418 payment on May 21.
An undercover federal agent then had phone conversations and text messages with Johnson.
On August 25, Johnson accessed Dropbox links the undercover agent sent to him.
He confirmed the Forms 941 were correct, but according to the Internal Revenue Service (IRS), their records show that the company did not file any Forms 94 in 2019, and the Pennsylvania Department of Labor &Industry did not have any business or wage information from Synergy from January 1, 2018, all throughout August 2020.
On a recorded call with a different agent, Johnson mentioned he paid his employees by check, but according to allegations, Synergy’s bank records showed that on January 2019 and July 2020, Johnson paid one to three employees by check amounting between $500 and $650 and that there are no bank records that would show that the company’s monthly payroll was $155, 851 as Johnson reported in his loan application.
According to the criminal complaint filed against Johnson, the conspirators were able to jack up the loan amounts by giving false bank statements and payroll tax forms, where 90% of the applications were either planned or prepared.
Evidence also points to Johnson and his conspirators applying for loans totaling over $24 million and that 42 of them were approved and funded for a total of $17.4 million.
New York AG Fighting Businesses Profiteering During the Pandemic
Hillandale Farms and its subsidiaries were hit with a lawsuit from the New York Attorney General, as they were challenging high prices of eggs during the outbreak.
Letitia James, New York Attorney General, reported that Hillandale violated price gouging laws when it hiked up egg prices between March and April as a sudden surge of COVID-19 cases happened in New York.
According to allegations, more than 4 million egg cartons were sold at high prices to grocery chains, military facilities, and wholesale distributors. Every day customers were forced to pay exorbitant prices as indirect buyers.
In January 2020, Hillandale allegedly sold large white eggs to Western Beef Supermarkets between $0.59 and $1.10.
In April, during the start of the pandemic, the cost went up to $2.93.
Similarly, Hillandale sold West Point Military Academy for $0.84 in January, then a price hike up to $2.15 in April.
The lawsuit asserts that Hillandale has profited to around $8 million by just selling eggs in New York during the pandemic, and half of that was allegedly obtained through unfair price hikes.
The price hikes are particularly harmful as eggs are a staple in the diet of most Americans.
James also points out that Hillandale knew the eggs were highly in demand during the pandemic, thus intentionally raising egg prices to take advantage of the crisis.
According to allegations, there was no legal reason Hillandale needed to increase prices.
It wasn’t to offset any increased costs but to profit unfairly from New Yorkers during the pandemic.
Editor’s Note on Everything You Need To Know About COVID-19 Lawsuits and Legal Issues:
This article is an informative collection of some of the lawsuits among many that resulted from the Covid-19 pandemic.
The aim of this piece is to create general awareness of how the big players controlled the market in their favor and carried illegal profiteering.
If you’re affected and feel like there could be a lawsuit filed against the culprit, please send us a message by clicking the ‘Contact Us’ button below. We’d love to hear back from you!
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