The Utah Division of Consumer Protection filed a citation this week against a Nevada-based company it says price gouged two Utah law enforcement agencies that bought personal protective equipment amid the coronavirus outbreak.
Monday’s citation alleges that SwabTek, which usually sells test kits to help law enforcement officers identify narcotics and explosives, sold South Jordan 500 N95 masks and 2,000 three-ply masks last month for a cost more than $2,000 greater than allowed under the state’s price gouging statute.
A few weeks later, the company sold the Box Elder County Sheriff’s Office 2,000 three-ply masks, 180 disposable medical gowns and 1,000 N95 masks for $2,300 extra, the citation states.
Altogether, the division has cited SwabTek for five instances of charging “excessive prices” during an emergency, with each violation of the statute carrying a maximum potential fine of up to $1,000.
“Generally, consumer protection will always try to [reimburse] people who have been scammed or in this case price gouged" through citations like these, said Brian Maxwell, a spokesman for the Utah Department of Commerce.
SwabTek CEO Bobby Betros, who pins the citation on a “technicality,” says the company has already returned any excess in charges to both customers in the form of store credits — a process that took place after an accounting of its actual costs to supply the personal protective equipment.
“We’re not about price gouging anybody,” he told The Salt Lake Tribune. “Matter of fact, we’re exactly the opposite. We threw our hat in the ring to try to help source this equipment for everybody and came up with a program that would guarantee we wouldn’t gouge our customers, without knowing how much it was going to cost at the time.
“If we were going to be gouging," he added, “we wouldn’t be gouging policemen.”
Emails Betros provided to The Tribune show the rebates were promised April 6 — three days after Maxwell said Utah regulators received the complaint.
Betros said he wasn’t yet sure if SwabTek would fight the citation through the administrative process, which can ultimately go up to district court, or agree to a settlement.
“Do I really want to fight it, have more news about it all?” he asked.
The Division of Consumer Protection has received hundreds of complaints in the past few weeks alleging higher-than-normal prices for everything from medical goods and grocery staples to gaming systems and bottled water.
The SwabTek citation is the second the division has filed. The first was against an Ogden resident who allegedly sold N95 masks at a price of $20 each and has refused to cooperate with investigators.
Utah’s price gouging law applies only in an emergency and only to goods or services that are deemed “necessary for consumption or use as a direct result of events giving rise to a state of emergency.” The statute doesn’t define what’s “necessary,” however, leaving that up to a judge to decide.
In determining whether someone engaged in price gouging, investigators look to find baseline costs to compare prices to — including whether the seller sold the good or service in the 30 days before the emergency and at what cost and whether there were wholesale price increases in the cost of obtaining the good or providing the service.
SwabTek had not sold masks, gloves or gowns in the time before the emergency, so the citation compares the cost of obtaining the products with the price at which they were sold. And the division alleges that the prices were more than 30% higher than it paid to obtain the products, which would violate the statute.
As masks and gloves have become vital equipment for law enforcement officers and other first responders doing their jobs amid the coronavirus outbreak, they have also become more difficult for departments to obtain.
South Jordan’s normal medical supplier ran out of personal protective equipment supplies early on in the pandemic, forcing officials to look at other options, according to South Jordan Fire Department Battalion Chief Mike Richards.
“We were trying multiple avenues, whether it was Amazon, some different vendors and people maybe we wouldn’t have purchased from before,” he said, noting that the Fire Department was purchasing equipment for other first responders in the city. “That’s, I’m sure, why we went to [SwabTek].”
Dale Ward, a spokesman in the Box Elder Sheriff’s Office, said the county came to SwabTek with a similar predicament.
“Under normal circumstances we would have probably sought multiple bids to try to find this stuff," he said, “but in these times we didn’t have time to do that.”
Ward said the county was unaware of the price gouging complaint until the citation was filed and noted that the department had received a credit from SwabTek for any excess charges.
“I can’t stress enough that the company has stepped up and fixed that problem,” he added. “If there were any issues with the pricing, it all got worked out, and we’ve been made whole."
Other police departments have been struggling to find affordable protective equipment, as well. Moab Police Chief Bret Edge said earlier this month that the department ended up paying $500 for five boxes of surgical masks on Walmart’s website — boxes that usually cost $13 each.
To assist with the shortage of protective equipment, especially in rural areas, the Utah attorney general’s office has been gathering supplies donated by businesses and recently distributed 9,000 masks and other protective gear to 53 agencies.
Still, law enforcement departments are desperate, “with nothing to protect themselves,” Betros said.
“When you look at it that way, you think we did a pretty good service to these customers of ours" by getting them the products, he said. "The last thing we want to do is hurt them.”