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House panel debates bill to create federal price-gouging policy

Republicans accuse Democrats of ignoring inflation, labor shortages and supply chain concerns

Rep. Cathy McMorris Rodgers, R-Wash., walks in a light rain to the Capitol for a vote on Sept. 22, 2021.
Rep. Cathy McMorris Rodgers, R-Wash., walks in a light rain to the Capitol for a vote on Sept. 22, 2021. (Bill Clark/CQ Roll Call)

A bill targeting corporate price gouging during the COVID-19 pandemic split members of a House Energy and Commerce subcommittee Wednesday, with Republicans accusing Democrats of ignoring inflation, labor shortages and supply chain concerns. 

Prices for a number of goods, including cleaning products and masks, have soared during the public health emergency. Consumer Protection and Commerce Subcommittee Chair Jan Schakowsky, D-Ill., blamed big companies for taking advantage of consumers by hiking prices on essential goods while cutting wages for workers.

The legislation would ban companies from selling products during the COVID-19 public health emergency at prices considered “unconscionably excessive.” The bill also would instruct the Federal Trade Commission to evaluate whether prices are justified through higher costs to the manufacturer or lost profits.

Full committee ranking Republican Cathy McMorris Rodgers of Washington called the hearing a “deliberate diversion” from inflation issues.

“We see record spending, we see top-down mandates, COVID-19 restrictions, [and] surging energy costs that are making rising prices and empty shelves worse,” she said. “It’s all connected.”

Rakeen Mabud, chief economist at progressive advocacy group the Groundwork Collaborative, testified that price hikes are contagious among publicly traded companies.

“When one company is able to get away with padding their profits and price gouging, shareholders from across the board want in,” she said, adding that those who don’t endure “massive selloffs.”

Schakowsky sponsored the bill along with Energy and Commerce Chairman Frank Pallone Jr., D-N.J., Judiciary Chairman Jerrold Nadler, D-N.Y., and Judiciary Antitrust, Commercial, and Administrative Law Subcommittee Chairman David Cicilline, D-R.I.

But Republicans said the bill is vague and lacks specific definitions included in many state anti-gouging laws. Witnesses also testified that the bill lacks provisions to address current market problems.

“Unfortunately, it does not address the supply chain crises and disruptions,” said Glenn Richey, chair of the Auburn University Harbert College of Business Department of Supply Chain Management. “And those disruptions create scarcity in the marketplace and scarcity is what allows for price gouging.”

The hearing followed a similar one on fraud held the day before by the Senate Commerce Subcommittee on Consumer Protection, Product Safety, and Data Security, where Chairman Richard Blumenthal, D-Conn., pledged to introduce new legislation bolstering enforcement efforts.

The number of consumers falling prey to scams has increased 19-fold since 2017, according to the Federal Trade Commission. Since January 2020, the agency has received more than 292,000 reports of pandemic-related fraud, resulting in $674 million in losses.

Blumenthal had hammered the FTC in the Senate hearing Tuesday over its tendency to send fraudulent companies warning letters, rather than seeking charges. FTC Bureau of Consumer Protection Director Samuel Levine defended the strategy as the quickest and most effective way to protect consumers, but promised the agency would pursue more cases in the future.

Blumenthal pushed Levine on why the FTC hadn’t come to Congress for more help, including in holding online marketplaces like Amazon and Facebook more accountable for fraudulent products sold on their sites. 

“I want you to do more than just work with us,” Blumenthal said. “Request the authority.”

Blumenthal indicated his bill, which has not yet been released, likely would allow the FTC to pursue criminal charges. In 2020, Congress passed legislation as part of an appropriations law giving the FTC authority to seek civil penalties for COVID-19 medical scams. 

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