Focus on Real Drivers of Prices, NACS Tells House Subcommittee

ALEXANDRIA—NACS today sent a letter to the House Energy & Commerce Subcommittee on Consumer Protection and Commerce providing its views on the subcommittee’s hearing on price gouging during the COVID-19 pandemic. NACS told the committee that the pandemic was no longer an emergency that carried price gouging risks. Instead, normal market economics—including those relating to supply chain problems and labor shortages—were leading to inflation.

While NACS “supports proper enforcement of laws against price gouging,” such cases must be narrowly limited to situations in which dramatic increases in prices are tied directly to attempts to take advantage of consumer desperation during an emergency. Those situations may have existed in early 2020, but “[t]he market emergencies that impacted consumer behavior in those early days of the pandemic, however, have largely dissipated at this point.”

NACS urged that as the subcommittee considers legislation relating to price gouging it should:

• Ensure that businesses have a strong affirmative defense against allegations of gouging that cover any cost increases, as well as any anticipated cost increases that retailers must take into account in order to replace their inventory;
• Not allow claims of price gouging unless they are tied directly to price increases that take advantage of the emergency and consumer reaction to it;
• Not compare current or future prices to any prices in place prior to the pandemic due to the large inflation that has occurred during the past year; and
• Narrowly limit the products covered by any legislation to those directly affected by the emergency.

NACS also directed the subcommittee’s attention to the credit card industry’s role in rising inflation and profiting any time that there is inflation. NACS noted that “swipe fees act as an inflation multiplier. With fees averaging more than 2% every time a credit card is used, that multiplier has a real impact on the prices that consumers pay every day.” The letter concluded that, because swipe fees on credit cards are the result of “centrally fixed pricing” rather than a competitive market, those fees “should be at the top of the list of issues that need to be addressed” by the subcommittee.  

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