MINNEAPOLIS, Minnesota — Allegations of pandemic profiteering and consumer complaints about price gouging appear to be everywhere during the COVID-19 crisis.
The Minnesota Attorney’s office has received more than 600 hundred complaints to date and issued more than 20 warning letters to retailers about suspected violations of the Governor’s emergency order banning price gouging on food, medicine and other “essential consumer goods and services” in the wake of the COVID-19 crisis.
KARE 11 is also working to identify and expose coronavirus related scams and price gouging.
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One viewer tip about suspected price gouging on hand sanitizer at a North East Minneapolis gas station revealed some inflated prices start farther up the food chain than your local retailer.
The Gas Station
Following up on a viewer tip, KARE 11 paid a visit to a Speedway gas station on Broadway St NE during the last week of March to try to determine if price gouging was taking place.
On the checkout counter sat a box of 50 cloth medical style masks marked as “$3.00 each one.”
“They’re $3 each?” asked KARE 11 investigative reporter A.J. Lagoe.
“Yeah,” replied the clerk through the mask she was wearing.
Lagoe: “Do you think that’s price gouging?”
Clerk: “I don’t know about the masks because I’ve never seen them anywhere.”
Lagoe: “You don’t know what they normally sell for each?”
Clerk: “I haven’t got a clue. We don’t ever carry them except for now.”
It’s difficult to determine an exact brand for the masks since the writing on the box is entirely in Chinese.
However, a search online found similar boxes of 50 masks selling at CVS drugstores for $12.49 – but they were out of stock.
On Amazon, boxes of 50 could be found for a number of different prices, including a seller who listed them as in stock and selling for $31.99.
To purchase the entire box of 50 masks at the gas station would cost $150.
The Speedway was also selling two-ounce spray bottles of hand sanitizer for $3.99 and eight-ounce bottles for $10.99.
The same brand of eight-ounce bottles can be found selling at Cub stores for $1.99.
But the Speedway manager insisted that this was not price gouging and instead was normal retail mark-up based on what he paid from his supplier.
The Speedway store provided invoices showing their purchases of masks and hand sanitizer which they said they did not even carry prior to the coronavirus pandemic.
The mask invoice shows the gas station paid $1.75 per mask for a total of $87.50 for the box of 50.
By selling the masks to customers for $3.00, the store’s gross profit stands at $1.25 per mask.
The two-ounce spray bottles of hand sanitizer were purchased for $2.00 each and sold for $3.99.
The eight-ounce bottles being sold for $10.99, cost the store $7.45 from their supplier.
Through the gas station’s attorney, the Speedway operator told KARE 11 they were charging “reasonable retail mark-up from the costs of the items,” and not violating Governor Walz’s order against price gouging.
“The operator believes that the business has been and remains compliant with the dictates of Emergency Executive Order 20-10,” wrote attorney Peter MacMillan.
Retailers who can show they are just passing along price increases from suppliers are exempt from the executive order banning price gouging.
American General Merchandise of Shoreview is the supplier listed on the invoice for the masks and small sanitizer bottles.
When contacted by KARE 11, CEO Aboubakr Mekrami originally blamed the inflated prices on his supplier and said he would try to provide records showing what he paid for the goods from his source.
He changed his mind the next day.
Mekrami declined interview requests and said by phone, “We didn’t do anything illegal. We’re not going to share any information with you because we don’t want to damage our relationship with our suppliers.”
Most of the enforcement actions and warnings issued by Minnesota Attorney General Keith Ellison’s office so far have been directed towards retailers and online platforms such as Amazon and eBay.
KARE 11 asked Ellison if during their investigations they’re regularly coming across retailers pointing the finger higher up the supply chain.
“What are you hearing from some of these retailers who might be saying: ‘Look, this is what I’m having to pay from my supplier, they’ve jacked the prices up 500%?” asked Lagoe.
“Well let me tell you, that’s not what we’re hearing,” Ellison said, “You know, but if that’s a defense, we want to hear it.”
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The state of Minnesota has set up a hotline for general questions about coronavirus at 651-201-3920 or 1-800-657-3903, available 7 a.m. to 7 p.m.