More Than 750,000 Masks Auctioned for Huge Markup While Hospitals Run Out
If permission is withheld, Worstell said he’ll re-auction the items starting at $1 as soon as the state of emergency is lifted.
(Bloomberg) -- At a time when shortages of protective gear are putting health-care workers at risk, more than 750,000 medical-grade masks went up for online auction in Texas.
Bottles of Purell sold for over $40. A box of 16 masks went for $170. They could be had retail for $3 each before the coronavirus.
The week-long bidding that ended Tuesday was hosted by the website Auctions Unlimited. The health-related products pulled in $154,000 in sales, according to Houston-based website owner Tim Worstell. He estimated that he personally made as much as $40,000 on the sales.
Worstell would not publicly divulge the names of the buyers, and he identified the sellers only as “large companies.” He said the companies commissioned his website to sell masks, disinfectant wipes, cleaning solutions and hand sanitizer, all items in high demand as coronavirus spreads. Because the Texas attorney general issued a cease-and-desist order on March 20 to block the sales during a state of emergency, which was declared March 16 by Governor Greg Abbott, Worstell said the transactions couldn’t be completed without approval from law enforcement.
If permission is withheld, Worstell said he’ll re-auction the items starting at $1 as soon as the state of emergency is lifted. He said he’d already turned over the names of the sellers to Houston law enforcement and the state Attorney General.
Essential Items
As of Tuesday afternoon, 52,145 Americans have been diagnosed with Covid-19, the illness caused by the new coronavirus, and 677 have died, according to Johns Hopkins University. As the numbers mount, hospitals find themselves so lacking in essential gear like the masks sold at auction that many of them have appealed to people to make the masks at home, or they’ve reused them, swapped them for other needed products or tried to buy them from unauthorized overseas vendors.
New York Governor Andrew Cuomo is among state chief executives who’ve complained about the lack of availability of medical equipment, and said when state officials can locate items the prices are often inflated. Cuomo said, for example, that a mask priced at 58 cents before the virus hit was now quoted at $7.50.
Each state has its own laws governing price gouging. In Texas, it’s illegal to sell medicine, among other things, for “an exorbitant or excessive price” during a state of emergency. The civil penalty is as much as $10,000 per violation -- more if the victim is over 65 years old.
“The states are really policing it,” said Anthony Argiropoulos, head of the price-gouging response team at the Epstein Becker & Green law firm in Princeton, New Jersey. “Price gouging is usually pretty obvious.”
Worstell said he doesn’t view the sales as profiteering. “Everything I’ve got starts at $1 and it stops when the bidding stops, so I’m not demanding a particular price,” he said.
Donate Equipment
Worstell said he asked the sellers to consider donating the equipment, and some did. Others wouldn’t, and Worstell went ahead with the auction.
“This wasn’t an easy decision by any means,” he said.
Auctions Unlimited began the bidding on March 17. Three days later, it received the cease-and-desist order. Worstell said it was only a warning letter, though it directed him to “immediately discontinue these practices.” He said he also received a warning from local police.
On Tuesday, President Donald Trump invoked the Defense Production Act, which makes it easier for the federal government to demand that businesses manufacture key items such as surgical masks.
Some of the auction’s customers may have been hospitals. Representatives from Texas Children’s Hospital and Houston Memorial Hospital viewed the masks, as did a local fire department, but Worstell said he didn’t know if they ended up buying.
The auction brought in 204 buyers. Worstell said only “a small fraction” of the 425 lots up for bidding went for a notably high price.
The auction couldn’t be stopped despite the warning letters, Worstell said, because he was “contractually obligated” to sell the items by a certain date.
“We specialize in liquidating surplus and retired assets from corporations all over America,” Worstell said. “That’s what we do, and we’re good at it.”
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