Ohio may make it a crime to spike prices on baby formula

Increasing prices on baby formula during statewide shortages could become a crime in Ohio if a new bill becomes law.

Price gouging would be measured as price hikes of more than 5% above the standard cost immediately prior to formula shortages.

House Bill 718, introduced in the Ohio House in August, would allow the state to hit suppliers with criminal penalties that vary depending on the number of offenses, but go up to a first-degree misdemeanor and $1,000 fine for repeat offenders.

The legislation faces an uphill battle: the two-year legislative session ends in December and any bills that haven't won approval in both the House and Senate die.

Baby formula supply still a concern

“Supply is still a concern, and there just aren’t sufficient protections in Ohio for folks dealing with price gouging,” said state Rep. Jeff Crossman, D-Parma, a co-sponsor of the bill. “This is about people subverting the market to try and make an extraordinary amount of money.”

Prompted by the national baby formula shortage in May, the bill was introduced after infant formula giant Abbott Nutrition resumed production of powdered infant formula at its plant in Sturgis, Mich. Abbott temporarily shut down the plant earlier this year due to reports of bacterial contamination alleged to be connected with four infants who fell ill with bacterial infections after consuming formula made at the plant, including two who died as a result of their infections.

In February, Abbott voluntarily recalled batches of three different formulas made in the plant following an investigation by the U.S. Food and Drug Administration. The shutdown and recall sparked a nationwide shortage of baby formula — the plant is estimated to have controlled about one-fifth of formula supply in the U.S., according to Bloomberg. Labor shortages and supply chain issues related to COVID-19 have exacerbated the problem.

How baby formula prices rose during shortage

Though formula scarcity has improved since mid-July, 23% of powdered baby formula products remained out-of-stock in late August, The New York Times reported. Prior to the Abbott recall and shutdown, that out-of-stock number was at 10%.

High demand for formula and dwindling supplies has forced many families to pay online resellers high prices to get the specific brands they need due to medical or dietary restrictions.

For example, a parent looking for a 12.5 oz. can of Enfamil Infant Formula Powder could normally expect to pay about $17.26, or $1.38 per ounce (the retail price at Wal-Mart). If that parent can't find Enfamil anywhere else, they might end up paying around $26.99 — about $2.16 per ounce — the price one eBay listing charged as of Tuesday for that same size can.

A year’s worth of formula could cost anywhere from $1,200 to $1,500 depending on the brand and type of formula, according to parenting website WhatToExpect. Babies cannot start eating solid food until six months of age, and can’t drink cow’s milk for at least a year, according to the Centers for Disease Control and Prevention.

About 23.7% of Ohio babies born in 2019 were exclusively breastfed to six months, according to the 2022 CDC Breastfeeding Report Card. On the other hand, 23.9% of Ohio infants received formula within their first two days of age.

The Federal Trade Commission issued an alert in May warning consumers about online scammers using official-looking websites and social media accounts to charge steep prices for formula they will never send.

The Better Business Bureau put out a similar alert in May. The BBB received at least 17 reports of scammers using fake sales to take advantage of consumers buying baby formula since Feb. 1. The latest scam report was made on Jul. 29, according to the BBB's Scam Tracker.

"I attended a community meeting where parents talked about not finding formula on the shelves and saw the price of formula being raised in three different stores," bill co-sponsor state Rep. Shayla Davis, I-Garfield Heights, said. "I have one of the poorest districts in Ohio and if my residents are saying it, there are poorer people (saying it too)."

Parents take matters into their own hands

Many families, fed up with navigating empty store shelves and the volatile resale market, have formed local online communities to help find formula.

Facebook groups such as Columbus Formula Finders have become one-stop-shops for families to exchange information about which stores have what in stock. Members can donate unused formula to others, and buy, sell and trade formula on the page — as long as no one is doing it for profit.

"It is disgusting to me that people take advantage of such a vulnerable time by trying to make a quick buck," said Kelly Keyser, the mother who created the group. "Parents are worried about feeding their child, and some have chosen to prey on them. It’s disgusting."

Keyser, a nurse at the James Cancer Hospital, launched the Facebook group in May while on maternity leave after she and a friend discussed the stress of being a parent during the formula shortage.

The group has grown to more than 2,500 members.

"I was really encouraged by how quickly it grew, it was clearly very needed and has helped feed so many babies," Keyser said. "I have really been encouraged by the members of this group who are so willing to help find formula for people they don’t even know."

She said her group encourages parents to seek help from their pediatricians if they can't find or afford the formula they need.

Does Ohio already have consumer protection laws?

Although Ohio does ban unfair sales practices, there are no state laws that specifically prohibit price gouging, said Bethany McCorkle, spokesperson for the Ohio Attorney General's office

In Ohio, suppliers are prohibited from using sales practices deemed "unconscionable," including participating in consumer transactions that are "substantially in excess of the price at which similar property or services were readily obtainable in similar consumer transactions by like consumers," according to state law.

“The Attorney General’s office is supposed to be the chief consumer protection attorney in Ohio,” Crossman said. “There are laws that allow the Attorney General to do it now, but this is a specific line in the sand for a specific product.”

The Attorney General's office has used the statute in the past to charge retailers, most recently to go after "pandemic profiteers" who hoarded essentials like toilet paper during the COVID-19 lockdown, McCorkle said.

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This article originally appeared on The Columbus Dispatch: Baby formula price gouging could become illegal in Ohio