3M Sues Price-Gougers Who Used Amazon To Sell Masks At 1,800% Markup (arstechnica.com) 82
An anonymous reader quotes a report from Ars Technica: 3M -- which manufactures N95 filtration masks that have been in high demand since the COVID-19 pandemic began -- is suing merchants who used Amazon to sell 3M and counterfeit masks for more than 18 times their standard price. A group of third-party merchants on Amazon "operated an illegal scheme to advertise and sell counterfeit, damaged, deficient, or otherwise altered respirators" to customers, 3M alleges in the complaint (PDF), filed in federal court in California. 3M has drastically increased its production of N95 respirator masks, the company says, but has kept its pricing between $0.63 and $3.40 per mask, depending on the model. The resellers in the suit, however, were allegedly selling a model that has a typical list price of $1.27 for for an average of $23.21 per mask, more than 18 times higher than 3M's price.
Amazon has already taken down the listings in question, 3M notes in the suit, but due to the way Amazon's third-party marketplace works, "banned" goods and sellers pop back up all the time. This case is likely to be no different, 3M claims, writing that the defendants have a history of launching "multiple front entities to perpetuate their unlawful activities" and adding that the defendants will probably keep doing it "until they are enjoined by this court." 3M seeks financial penalties against the resellers but says any monetary awards it receives "will be donated to charitable COVID-19 relief efforts."
Amazon has already taken down the listings in question, 3M notes in the suit, but due to the way Amazon's third-party marketplace works, "banned" goods and sellers pop back up all the time. This case is likely to be no different, 3M claims, writing that the defendants have a history of launching "multiple front entities to perpetuate their unlawful activities" and adding that the defendants will probably keep doing it "until they are enjoined by this court." 3M seeks financial penalties against the resellers but says any monetary awards it receives "will be donated to charitable COVID-19 relief efforts."
Standing (Score:4, Insightful)
I don't think 3M has any standing to sue, unless these resellers sold 3M's masks back to 3M.
Re:Standing (Score:5, Informative)
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I think they do if counterfeit products were being sold as 3M brand products. I agree with you if it comes to price-gauging or selling compromised products. I'm assuming that it's going to depend on whether these merchants are reselling, or if they are selling products as a licensed distributor (with contract obligations). But I'm not a lawyer, I don't know.
Re:Standing (Score:4, Informative)
Reading TFA it seems like they are complaining that the resellers misrepresented their products. They say they sold counterfeit or modified masks at a huge mark up, while 3M kept selling its real 3M products at normal price.
It's not all that clear but I think they are suing because of the counterfeiting, not so much the price gouging. The price stuff is just thrown in to show how evil these counterfeiters are, the usual lawsuit stuff.
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When I post an Amazon review it doesn't go live immediately, they have to manually review it first.
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Yeah... and while great for painting the defendants as villains... "the company says, but has kept its pricing between $0.63 and $3.40 per mask" this sounds like the company limiting the damages it can claim to me because by its own admission that is all 3M would have gotten for the masks.
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It isn't about the money. It is mostly to force them to stop doing it. From their filing:
3M seeks an award of monetary damages (trebled), attorneys’ fees and costs, the disgorgement of Defendants’ illicit profits, prejudgment interest, and injunctive relief preventing Defendants from future unlawful acts against 3M’s rights. Any monetary awards received by 3M will be donated to charitable COVID-19 relief efforts
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I've reported counterfeit products to Amazon. At best, I see them again under a different seller.
Right now there may be two manufacturers in China making oral fever thermometers with no attempt at any quality control. There are far more vendors packaging and selling them. They bubble up and endure like carbonation in soda-pop.
Re:Standing (Score:5, Informative)
"A group of third-party merchants on Amazon 'operated an illegal scheme to advertise and sell counterfeit, damaged, deficient, or otherwise altered respirators' to customers, 3M alleges in the complaint (PDF), filed in federal court in California."
Yes, they have standing to sue [findlaw.com].
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I don't understand why they're not suing Amazon.
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I don't think they can sue Amazon directly unless they get evidence that Amazon was somehow aiding and abetting the counterfeiters or otherwise somehow negligent in their own duties.
They probably CAN however cite Amazon as a potential witness and serve them with a subpoena, and Amazon may find itself in legal hot water if they don't cooperate in 3M's lawsuit against their vendors.
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I don't know, I might be inclined to let 3M sue Amazon directly.
Currently Target and Wal-Mart have enormous supply-chain quality-control departments for items sold in their brick-and-mortar stores. (There was one article in particular that described how Target discovered the 300-thread-count sheets that were being sold were actually 260-thread-count sheets and went back to hammer the manufacturer of those sheets about it.) As far as I can tell Amazon has no comparable quality control department - they jus
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I don't understand why they're not suing Amazon.
They would have to show Amazon didn't take the normally accepted actions when counterfeit products are reported to them.
If ebay, craigslist, facebook, etc all took down their listings of fake masks but amazon did not, then 3M might have such a case to make.
But what happened was amazon took down the listings just like everyone else, so there is no case to be made that they were somehow exceptional.
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They were either counterfeit OR the resellers were violating their pricing agreement with 3M as their distributor. In either case, 3M wins.
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No. They could also be "just people" who bought a bunch of 3M masks from 3M then resold them at a higher price. There is nothing preventing one from selling something which one owns at whatever price the market will bear. 3M has no standing whatsoever to sue these people unless these people are making claims that they are somehow associated with 3M.
For example, I could go and buy a shitload of "Toshiba TV's" as price X, and then sell them again as "Toshiba TV's" at price Y, and make a profit by doing so.
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There are price gouging laws which prevent that. From the lawsuit filing:
106.On March 12, 2020, Governor Newsom issued an executive order further enhancing the ability of the California state and local governments to respond to COVID-19.
107.On information and belief, Defendants sold or offered to sell consumer goods, emergency supplies, and medical supplies (including, but not limited to, purported 3M’s branded N95 respirators) for a price more than 10 percent greater than the price charged by Defenda
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And how exactly does that give 3M a right-of-action against the "violators" other that to seek a declaration that the "facts" constituted a breach of the law as codified in an action including the "prosecutor for the violation of the law in question" for a mandamus order requiring the "enforcer of the law" to "enforce the law"? That states no claim known to law for and action against the "violators" for damages, merely against the "enforcer" to require them to "enforce".
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for a price more than 10 percent greater than the price charged by Defendants for those goods prior to the proclamation or declaration of emergency
As it says right there too, it has to be proven that they 1: paid a lower rate for the items, and 2: they had the items before the state of emergency. See my latter point about how easy this is to defeat.
I don't know about commiefornia, but sane states have state of emergency price gouging laws that are limiting it to X% markup over the (new) price you had to pay to acquire the high demand items from where you bought them from.
There is a big distinction there. In that case 3M could still sell masks for $1.0
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I don't think 3M has any standing to sue, unless these resellers sold 3M's masks back to 3M.
Cut their balls off, and see if these scammers are still standing.
Hahahah good luck (Score:2, Insightful)
Normally it's companies who attempt to control the resale value of goods that end up in court for their practices. The idea that the reverse is true, and that 3M can somehow control the price of what a 3rd party sells their goods for is laughable.
At best they can abuse their market position to pressure Amazon into a delisting, or to blacklist official resellers who are supporting this practice. But honestly as much as the thought of these masks going for these prices are is horrid, 3M can screw off. We don'
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If anything we need people *stop buying medical grade masks just to go to the frigging shopping centre*.
If the other people in the store were wearing even a thin cloth mask, everyone is protected. But if other shoppers aren't, the only protection that works is a medical grade mask.
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It's like you didn't even read what I wrote. If you want to protect yourself, and others aren't wearing a mask, you need an N95. These masks wouldn't be necessary if everyone was wearing something to protect me.
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Correction: you need an N95 mask, and face shield, and ear protectors, and latex gloves, _and_ you need to not touch your face until you get home and discard/sterilize the equipment properly and wash your hands for 8 minutes to flush away the viruses.
Surgeons have the training and self-discipline to do this. Your average human - probably including you - won't be able to not touch your face for five minutes, let alone the time it takes to get to the store and back and go through the sterilization process.
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I said protect yourself. Not protect yourself absolutely.
We're not talking about some kind of level 4 containment. I don't care about reducing my risk to 0%. I'll take 0.1% risk of transmission.
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But if other shoppers aren't, the only protection that works is a medical grade mask.
A statement that makes no sense what so ever. The risk reduction is achieved regardless.
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You're making no sense. Risk reduction for other shoppers is reduced no matter what mask I'm wearing. Risk for me only decreases with the higher grade mask if nobody else is wearing one.
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You could at least read the damn summary. They are selling "counterfeit, damaged, deficient, or otherwise altered respirators". 3M has every right to stop that. The ridculous price is just the icing on the cake.
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You could at least read the damn summary.
I did. I get it you like cute soundbites but you should look deeper and realise that this is just one of many such suits and most make no claim of alteration or damage etc.
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And just how did such goods get into the supply chain? Amazon should have ensured they were pulped. Of course Amazon is going to virtue-signal by screaming that they're counterfeit. Factories have more than a single loading dock. And more than a single assembly site.
There will always be people purchasing crap products. Maybe they're not just stupid. Maybe all they can do is believe corporate lies and hope. That's the antithesis of what I call "freedom".
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It's a tricky one. Had 3M been undercutting the market with loss leaders to force competition out of business then selling their products at a fair market price would be a good thing.
They're not. They're seeking to protect their brand and prevent exploitation of their customer base by immoral actors.
You rarely hear about 3M. They keep a low profile and make products that are in every household. It's quite impressive.
I'm willing to assume good intent on this one.
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I agree. Product arbitrage is healthy for a market. The market corrects prices higher than buyers are willing to pay, even if sellers are making an excessive spread.
"operated an illegal scheme to advertise and sell counterfeit, damaged, deficient, or otherwise altered respirators" I assume this is from the cause of action. The whining about price gouging is because they weren't able to participate, and for headlines and talking heads.
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"The market corrects prices higher than buyers are willing to pay"
The market corrects prices higher than any buyers are willing to pay but there exists more than one balance point. There exists a point where you maximize margin and profit selling the least number of units possible and then another point where you make smaller margin but more sales and about the same profit. The free market allows either result and the former might be slightly advantageous for the seller but the latter is a superior result f
Re:Piss-poor reporting fails to id cause of action (Score:5, Informative)
It's clear that the cause is that the overpriced products were counterfeit. Also mentioned is damaged, altered, or otherwise deficient product, which is not better than no product. I'd recommend you slow down on your urge to point out the failings in others just a tad.
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That's a great deal of anger you are laying out there. It is not a matter of "Piss-poor reader comprehension" but rather a piss poor headline which starts the reader down a false path "3M Sues Price-Gougers Who Used Amazon To Sell Masks At 1,800% Markup" this indicates price gouging, using amazon to sell masks, and 1800% markup are the cause of action. Not only is it a poor summary of the content it appears to be a deliberately poor clickbait style headline which is INTENDED to mislead the reader and set th
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I hope you will remember this if you will ever need a donor organ.
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Price gouging is good in a free market. It leaves product available for those who value it for the price. The alternative is no product at any price.
Only if I'm free to gouge their eyes out. Why are you so desperate to defend parasites?
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Don't understand how price gouging works, do you? Someone buys up a product and attempts to resell it at a much higher price because the product is either in short supply or no supply. See this story [newshub.co.nz].
The alternative is no product at any price.
If people didn't buy up products in anticipation of gouging prices, there would be enough for everyone, though in limited supply. See this story [usatoday.com]. Had these two not gone out and bought
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Dear complete scum,
There have been laws against price gouging going back to the Middle Ages. Back then, let's say your city was under siege, and some piece of shit like you was hoarding food, and selling it to 'those who could afford it" (including selling themselves or their kids).
The city or state AG can sue you for that.
It's that, or just let the people decorate a lamppost with your body
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Free Market Economics (Score:2)
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What happened to the old Greek idea that something is worth what someone is willing to pay for it? O'l Adam Smith and Publilius Syrus, must be spinning in their graves.
It is a very valid principle until it is you your own good self that are the one having to pay $350 for a dose of insulin you can get for $30 in Canada or you your own good self are living in a hurricane devastated zone and people are selling you food at 2000% the normal price, cite O'l Adam Smith on you when you complain about price gouging and your political overlords are actively propping up the system that keeps things that way.
Re: Free Market Economics (Score:4, Insightful)
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Other manufacturers can't do a lot when the expensive stuff (newer basal insulins like Lantus and Tresiba) still have years and years of patent protection remaining.
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I'm in agreement that drugs like the newer insulins are too expensive, and also that the FDA appears to exhibit a degree of regulatory capture. I was merely pointing out that the newer insulins currently enjoy a legal monopoly, and will for some time.
To your initial statement, *some* insulins are cheap, but others are not. Contrary to what a lot of people think, the term "insulin" covers a bunch of different compounds that all have the same general effect of encouraging cells to take in glucose, and that
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don't you think new manufacturers would enter the field and produce more insulin
Really long story short. Insulin is a biological compound (it comes from living cells). So the rules on how companies patent that is massively complicated. Literally skipping a ton here. The patent is based on the genetic makeup of the living cells, the process for cloning, the process of extraction, purification, and so on. So drug makers have figured out that you can make a slight genetic variation in the living cells, a slight change in the cloning process, or some other change in all the steps and
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I tend to believe the adage that simple solutions to complex problems are ill-thought out and don't actually solve the problem. I'm also nominally opposed to price controls in general. The above said, I've always thought that drug prices are a soluble problem that would not require much in the way of political will to solve--to wit, regulation to the effect of "thou shalt not sell a drug domestically for more than you sell it for in other first world nations."
It solves the "third world poverty" issue, whe
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If you are smart enough to cite Adam Smith, you are smart enough time figure out how to get insulin for 1/10th the price from Canada. If manufacturers can get anywhere near $350 for a dose of insulin, don't you think new manufacturers would enter the field and produce more insulin, driving down the price, increasing supply?
You are either a particularly unimaginative troll or a complete rube. However, if you are smart enough to cite Adam Smith, you are smart enough time figure that paying $350 for insulin in the US when the same amount costs $30 in Canada, then US citizens do not live in the kind of free market Adam Smith preached so don't tell me that this price discrepancy is the product of natural market forces. It isn't.
sell counterfeit, damaged, deficient, or otherwise (Score:2)
Me thinks the listing didn't say "counterfeit mask" or "damaged masks". The buyer eas willing to pay a certain price for one thing and received a different thing.
This is:Free Market Economics (Score:3)
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Speaking of 3M and Amazon (Score:5, Interesting)
Re: Speaking of 3M and Amazon (Score:1)
Those who don't boycott 'Dr. Evil' deserve what they fucking get.
Was it something you said? (Score:2)
I don't personally care about the feelings of Chinese counterfeiters, but I think it is important to get the reviews out there and if it means toni
Make America grat again (Score:2)
Price Gouging or Damaged/Altered? (Score:2)
The title seems to suggest they are suing for price gouging which makes no sense. If I'm 3M the last thing I want is to deter people from buying my products in the hope they can sell them later (unless 3M itself was going to stockpile but they aren't going to legally get away with that).
However, the quote suggests a very different and more sensible motive. Suing people who represented what they were selling as 3M products but that fell short of 3M standards or were counterfeit. I'm guessing this is what
Wish Price Gouging Wasn't Always Illegal (Score:2)
I understand why people want to bar people who just happen to have useful items in an emergency from holding out for absurd profits but I don't see why this can't coexist with laws that allow individuals who correctly anticipate that some kind of emergency might be forthcoming to stockpile for that purpose.
So what if we let people register stockpiles in excess of their usual need for the purpose of future price-gouging. That way the people who just have some extra items lying around and would have had them
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Or we could just forget all this nonsense about "undeserved windfalls"—which is really just envy speaking—and let everyone sell at the true market price.
Giving people who "just have some extra items lying around" an economic incentive to make those items available for others to use is just as economically important to correct resource allocation as rewarding those who anticipate the need and deliberately build up a stockpile.
In a market with price controls, shortages can only be expected to beco
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hmmm (Score:2)
Why do libertarians always seek government help when they lose on the private marketplace?
Wrong Target (Score:2)
If Amazon is not able to prevent counte
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That effort - the willingness to defend a brand or trademark - is legally required to maintain control of the brand or trademark. It's part of the cost of doing business. If they don't defend it then others can use it freely.
Without price setting, no one will make a profit!! (Score:2)
I get tempted to do this, but if I am going to buy a $2000 camera, I want a warranty, not an extra $300 in the bank. It's a weird paradox...the
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However, many manufacturers set prices and enforce them with contracts. Apple does this Canon and Nikon do it. Why? Because retail is fucking hard. You need to make a profit on your sale.
Except that they don't do this.
E.g. the Nikon Z7 is £2,719. ..unless you buy it from reputable camera shops that trade directly with Nikon and provide a warranty and support:
https://www.nikon.co.uk/en_GB/... [nikon.co.uk]
https://www.camerapricebuster.... [camerapricebuster.co.uk]
Nikon make a profit by selling to retailers at price point X (in this case, below £2500). They recommend that retailers sell the camera for £2719, assuring the retailer a gross margin of over £200.
Retailers choose how much m
Not suing for price gouging? (Score:2)
Supply & Demand (Score:1)
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