In a recent press release, a representative of the FTC addressed fraud and overcharging in the context of the baby formula shortage. 

Federal Trade Commission Chair, Lina Khan, spoke publicly on the agency’s investigation of the fraudulent sale and price gouging. The unscrupulous practices have resulted from a national shortage of the vital product for infants. 

Khan claims further that the FTC will “fully enforce the law” on those who participate in overcharging desperate parents. She also retains hope that this investigation will help the agency better understand and prevent future market failures. 

How exactly are online retailers taking advantage of the current situation?

In the midst of the formula drought, online retail sites have listings for 300% over the regular retail price. Among them are Amazon, eBay, Craigslist, and Facebook Marketplace

On the other hand, listings with “average” or “fair” prices have shipping and handling fees double the price of the product to avoid the sites’ notice. In response, eBay specifically is encouraging consumers to report these listings. 

FTC addresses baby formula shortage action

However, the FTC is aware that this is not exclusively a price-gouging problem. They plan to look into any issues with the supply chain as well. 

“Over the last few years, Americans have repeatedly experienced cycles of supply chain disruptions, shortages, stockpiling of remaining supplies, and reseller profiteering and price gouging. The FTC will do everything within its power to ensure the markets for other life-sustaining and vital products are competitive and resilient.”

— Lina Khan; Source: Business Insider

In the meantime, it is encouraging to see the FTC attack these unfair practices. Furthermore, their investigation into ways to thwart the situation that creates opportunities for fraud is admirable.

That is the only way to keep important products in the hands of the consumers that need them most. 

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