LI Wholesaler Sued For Price Gouging Lysol Amid Coronavirus: Feds

BELLPORT, NY — A lawsuit was filed against a Bellport-based wholesale grocery distributor accused of price gouging during the coronavirus pandemic, New York Attorney General Letitia James announced Wednesday. The lawsuit claims that Quality King Distributors, Inc., and its CEO, Glenn Nussdorf, illegally increased the company’s wholesale prices to sell Lysol disinfectant products to neighborhood grocery and discount stores in New York at a higher price.

The company denied the accusations and said it looks forward to contesting the claims in court.

According to the lawsuit, between January and April 2020, Quality King increased the price of Lysol spray from about $4.25 per 19-ounce can to as high as $9.15 per can and did not incur increased costs for the product. This caused the stores that purchased Lysol products from the wholesaler to then pass on those increased prices to their customers, according to the lawsuit.

Consumers were charged as much as $16.99 for one can of Lysol that was previously sold at a retail price range of $5 to $8, the lawsuit claims. James said the lawsuit was filed to seek restitution from Quality King for those consumers who were forced to pay "unlawfully high prices" for these essential products. Her office learned about price gouging after receiving complaints from consumers about retail stores' high prices, James said.

Between Feb. 1 and April 7, Quality King sold Lysol spray with gouged prices in at least 432 separate transactions, according to the lawsuit. These sales accounted for at least 3,835 12-packs of Lysol spray or 46,020 19-ounce cans.

"Quality King’s profiteering during this time of crisis is appalling," James said. "Instead of ensuring New Yorkers could protect themselves from this virus and stop the spread, Quality King chose to prey on a global pandemic to line its own pockets. I won’t hesitate to take action against any company that tries to cheat New Yorkers during this crisis and beyond."

Quality King rejected the allegations.

"Throughout the pandemic, costs to keep the supply chain open have materially increased in many ways including implementing protective measures to preserve the health and safety of Quality King’s employees," the company said in a statement. "Therefore, we were disappointed to hear that the New York State Attorney General was filing suit under the State’s vague price gouging statute without taking into consideration the many challenges to our business."

Nussdorf added, "We are proud to provide essential products to the people of New York and the rest of the country to ensure that all have access to critical items during these unprecedented times."

Before the COVID-19 pandemic, Quality King sold Lysol spray at the median wholesale price of about $4.25 for one 19-ounce can of the product or about $51 for a pack of 12 cans, according to the lawsuit. However, the lawsuit claims that the company has been slowly raising its prices as New York over the past few months.

According to the lawsuit, the first increase in price came in January after U.S. Secretary of Health and Human Services Alex M. Azar II declared that the United States had been under a nationwide public health emergency. Shortly after, Quality King was accused of increasing the wholesale price of about $5 per can or $60 per 12-pack in February 2020.

After the U.S. Centers for Disease Control and Prevention announced that they expect to see community spread of the virus, the company raised the prices about $7.95 per can or $95.45 per pack by early March, the lawsuit claims. As additional news and information regarding the virus continued to be announced by officials throughout March, the company continued to increase its prices, according to the lawsuit.

By the end of March, the lawsuit states that Quality King charged its highest prices yet just two days after the CDC issued a domestic travel advisory urging residents of New York to refrain from nonessential domestic travel. At that time, the wholesaler was allegedly charging as much as $9.15 per can of Lysol spray or about $110 per pack, which is over double its typical price for the product just two months earlier, according to the lawsuit. During this time, Quality King’s own median costs to purchase Lysol spray from its suppliers remained flat at around $3.54 per can or $42.50 per 12-pack, the lawsuit claims.

This allowed the company to boost its gross profit margin on the product from about 21 percent before the coronavirus crisis to more than 95 percent during the crisis, the lawsuit claims. The lawsuit also alleges that Quality King’s price increases injured New York consumers, who sought to buy Lysol’s disinfectant products to kill the coronavirus on surfaces in their homes to reduce the risk of infection.

The lawsuit alleges that Quality King has also increased prices on Lysol disinfectant wipes.
The lawsuit is part of a bigger investigation by the Attorney General into price gouging by wholesalers and retail stores during the coronavirus pandemic after thousands of consumers have submitted reports to the attorney general’s office complaining that they have been charged higher prices for necessary products during the crisis, including disinfectants, sanitizers, household paper products, and food staples.

The lawsuit is also seeking for the company to pay a civil penalty of $25,000.

This is Quality King's statement:

This article originally appeared on the Patchogue Patch