Texas AG files 1st suit in mask price-gouging
Texas Attorney General Ken Paxton on Thursday filed its first price gouging lawsuit amid the coronavirus crisis, alleging a company illegally drove up prices for health-related products.
After Gov. Greg Abbott declared a state of disaster on March 13, Auctions Unlimited, LLC, listed an auction on its website for over 750,000 face masks as well as N95 particulate respirator masks, hand soap, allpurpose cleaner and disinfectant wipes, according to the attorney general’s office.
On March 24, bidding on N95 respirator masks pushed listings as high as $180 for a package of 16 masks. According to the suit, the company typically sells these masks at auction for $10 to $20 a box.
The Houston-based company’s owner, Tim Worstell, denied the attorney general’s claims on Thursday. Customers determine prices, he said, not auctioneers.
“We believe that the attorney general is 100 percent wrong,” Worstell said. “It’s a shame, because the buyers of these masks need these masks today.”
American hospitals are experiencing severe shortages of such supplies as they race to treat rising numbers of positive COVID-19 patients. Many are scrambling to buy more, asking the public to donate or make masks at home, reusing them or using substitutes that aren’t fully protective. The Centers for Disease Control and Prevention
in an unprecedented move this month recommended nurses use bandanas or scarves in place of masks as a last resort.
Worstell admitted to receiving warnings from both local police and the Texas Attorney General but moved forward anyway, according to the office. The company made $154,000 in sales over these auctions and Worstell personally made as much as $40,000.
The penalty for price gouging in Texas is a fine of up to $10,000 per violation with an additional penalty of up to $250,000 if the affected consumers are elderly.
“The Texas Deceptive Trade Practices Act expressly prohibits anyone from selling necessary items at an excessive price when a disaster is declared and, despite repeated warnings from law enforcement, that is exactly what we’ve seen Auctions Unlimited do,” Paxton said in a statement. “My office will not tolerate anyone taking advantage of Texans in need and profiting from this health crisis.”
The state is seeking a jury trial and ultimately to block the company from making further sales of products intended to protect against the spread of COVID-19.
Worstell said that he doesn’t view the sales as profiteering, saying that all of his company’s products start at $1. Auctions Unlimited, which specializes in liquidation sales for other businesses, has sold the masks since mid-2018.
He said he asked the sellers to consider donating the equipment, and some did. Others wouldn’t, and Worstell went ahead with the auction. He ended up selling to 204 buyers, he said.
“This wasn’t an easy decision by any means,” Worstell said.
After closing the sale, Worstell waited to send out the masks because he said he wanted definitive instructions from the attorney general’s office. In the terms and conditions of the auction, he informed the buyers that no sale was final until he received approval from the state, he said.
In the meantime, Worstell said he assumes the masks will sit unused in a warehouse — as they have for days — until the dispute is resolved.
“They’re going to sit here collecting dust because of these games,” he said.
Texans who believe they have encountered price gouging can call the Attorney General’s tollfree complaint line at 800-6210508 or file a complaint online at txoag.force.com/ CPDOnlineForm.