The office of Michigan Attorney General Dana Nessel sent Menards a cease-and-desist letter Tuesday, saying it had received 18 written complaints from shoppers about price gouging customers on cleaning and health products at Menards stores in Michigan.
Investigators said a Menards store in Michigan last week doubled the price of cleaning products like bleach, and raised the price of some face masks while tying their purchase to an in-store rebate, according to a news release from Nessel’s office.
Nessel’s office began receiving complaints about Menards early last week, according to the letter.
The letter indicates that a shopper who visited a Menards store in South Haven, Mich., to buy bleach was told by a store employee that the employee had been directed to double the price on cleaning products. Investigators from Nessel’s office visited multiple Menards stores in Michigan and found that on an empty shelf, a gallon of Clorox bleach was listed at $4.47, but on a full display of the same product, the gallon of Clorox bleach was listed at $8.99.
Menards spokesperson Jeff Abbott said in an email Wednesday that the company is working on responding to Nessel’s letter: “We are disappointed and are taking this very seriously.”
Abbott said that Clorox increased the concentration of its bleach in late 2019 and it resulted in a higher cost to retailers and 50% more uses per bottle for a roughly 1-gallon bottle of bleach.
Abbott said that while Menards was rolling out the new, more highly-concentrated bleach it priced it at $8.99, but lowered the price to $7.49 on March 13 “to be competitive in the market place.”
Abbott said: “As with all new or upgraded products, especially in these highly unusual, unprecedented conditions, it’s hard to figure out where the market will end up.
Based on the market, our $7.49 price on a 121-ounce bottle of 7.5% sodium hypochlorite concentrated bleach seems reasonable to us ... We will continue to monitor and adjust prices if the market changes. Our focus right now is to get products to our stores or else none of this would matter anyway.”
Abbott did not comment specifically on the allegations about face mask pricing.
Nessel’s office also said Menards priced two-packs of 3M face masks at $39.95, with a $20 rebate, through a screenshot of a website that “Menards has since removed.”
The letter stated: “As Menards is popularly known for its 11-percent rebate program, we are highly skeptical that the normal, pre-Coronavirus rebate on these masks was set at the recent level exceeding 50%.”
Higher prices on bleach and face masks were noted at at least two Menards stores, said Kelly Rossman-McKinney, communications director at Nessel’s office.
“They’re different stores in different parts of the state. It doesn’t appear to be a rogue store,” Rossman-McKinney told the Leader-Telegram Wednesday.
Nessel’s office sent a similar cease-and-desist letter to an individual True Value hardware store in west Michigan on March 6 after reports that the store was selling individually packaged face masks for $10 per mask, according to the letter.
The letter said the findings implicate that Menards is using unfair trade practices in violation of Michigan’s Consumer Protection Act.
The letter stated: “In the context of the media stories about the mounting public health threat caused by Coronavirus, Menards’ pricing actions this past week serve only to fuel anxiety and promote hoarding. Given its size and the number of store locations it has in Michigan, Menards’ misconduct carries with it the additional threat of encouraging other businesses to artificially inflate their prices to keep pace with your company.”
In Michigan, possible consequences of price-gouging include a court order for the store to stop raising its prices, damages to consumers and potential civil penalties up to $25,000, Rossman-McKinney said.
She noted that Nessel’s office’s goal is not to shut down stores, but to “ensure consumer goods can be made available to Michiganders at prices that make sense, and which are not rooted in an effort to exploit this public emergency.”
If Menards does not respond to the letter in 10 days, the Attorney General’s Office will take steps to file a civil lawsuit or begin a formal investigation, Nessel’s office said.
Menards and the state of Michigan could also agree to an assurance of voluntary compliance.
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