DATCP sends cease and desist letters to 16 Milwaukee-area companies over price gouging

MILWAUKEE --  The Department of Agriculture, Trade and Consumer Protection (DATCP) on Tuesday, March 24 sent cease and desist letters to Wisconsin businesses accused of price gouging on essentials like toilet paper, bleach and bottled water amid the coronavirus pandemic.

According to a press release from the DATCP, following dozens of complaints and thorough price checking at over 100 stores across Wisconsin, the agency issued cease and desist letters to 16 companies suspected of raising prices unlawfully during this period of economic disruption:

    One such company, N95Sales.com, which engaged in suspected price gouging on N95 masks, a critical item for front-line health care workers that is in short supply in Wisconsin, officials said. The site no longer exists.

    Lara Sutherlin

    "It appeared on its face that the price inflation was excessive and a violation of the law," said Lara Sutherlin, director of the Wisconsin DATCP.

    In Executive Order #72, Governor Evers declared a public health emergency in the State of Wisconsin. He also declared that Wisconsin is experiencing a period of abnormal economic disruption because of COVID-19. This declaration authorizes DATCP to enforce Wisconsin’s price gouging law until the emergency has ended. This declaration applies to the entire state and applies to any consumer good or service being sold at wholesale or retail.

    "Wholesalers and retailers, in general, are not price gouging Wisconsin residents," said Sutherlin. "In general, people are trying to comply with the law."

    Sutherlin said the department received 90 complaints about retailer prices since March 12, when it became illegal to sell items at prices 15% higher than pre-emergency prices.

    "The items we're seeing are cleaning supplies, masks, hand sanitizers, toilet paper, that kind of thing," said Sutherlin.

    Businesses have 10 days to respond and explain why prices went up -- possibly a legitimate reason.

    "Wholesalers and retailers are entitled to raise their prices if the cost of the business is going up with respect to that item," said Sutherlin.


    Kostas Cios, legal counsel for Cermak told FOX6 News:

    "Please know that Cermak Fresh Market has not and has never price gouged its customers. The state sent a letter to my client 2 days ago requesting information regarding a complaint related to watermelon and pinto beans, to which Cermak will reply and fully cooperate.

    The complaint related to watermelons indicated a customer paid $15 for a watermelon. Watermelons prices increased from $0.89 per pound to $0.99 per pound on March 15th due to a large increase in the underlying cost to the retailer for watermelons. Watermelon prices are generally higher in the winter as opposed to the summer, as they are limited in quantity and out of season. Nonetheless, the most recent increase was due solely to an increase in the underlying cost of the product.

    The complaint related to Pinto Beans indicated that Pinto Bean prices were raised to $2.99 per pound. Please know that Pinto Bean prices were raised to $1.49 per pound, not $2.99. The customer most likely saw the price for Coba Beans, which are located adjacent to the Pinto Beans, and assumed that those were Pinto Bean prices. The Pinto Bean price was raised to $1.49 per pound due solely to the fact that the underlying cost to the retailer jumped significantly.

    Please note that Cermak has not received any complaints regarding rice.

    In general, Cermak understands the publics frustrations during the past 2 week period. As a retailer, Cermak has been just as frustrated in their efforts to buy whatever product was available on the wholesale market in order to have products on the shelves to offer customers desperately trying the stock up on staples. Cermak has seen several of their underlying costs increase over the past few weeks due to abnormally high demand on wholesalers and manufacturer’s for various products. These increased costs to Cermak translated into retail price increases of certain products.

    Cermak Fresh Market takes great pride in its reputation, a reputation it has spent years building and nurturing. In no event would Cermak jeopardize that reputation for any short term gain. I kindly ask that any story you present to the general public does not insinuate that Cermak practices or has practices any price gouging as that would be the furthest from the truth."

    El Rey

    El Rey President and Owner Ernesto Villarreal issued the below statement to FOX6 News -- a response issued to customers when allegations began. A spokesman added:  "After tirelessly trying to defend ourselves against these claims, we feel it is almost impossible to do so.  It is an extremely difficult time to operate our stores.  As we discussed earlier, suppliers are limiting our orders and we are forced to look to alternate suppliers to supply our community.  We feel frustrated by these claims, but motivated to continue to serve our communities."

    "Dear Patrons,

    First, I hope this message finds you all safe in this time of concern for our community.

    Secondly, I realize that there has been some pictures going around about the pricing at our stores. I can assure you that increasing margins in this time of need is not on El Rey's agenda at any location. We continue to be committed to our community and neighborhoods and to serve them with the products they need for the best price we can. This week caught many of us off guard, as the realization of COVID-19’s arrival in the US has swept the nation. We have desperately tried to keep our shelves stocked as much as possible this week for you, and are actively searching for many everyday products that our normal suppliers are out of stock. As we are able to secure these items of limited availability, I assure you that our margins will remain consistent with the business model we have operated with in Milwaukee over the last 42 years. It has become apparent that the costs on these items have and will be volatile. We will continue to search for the best deals we can and provide the cheapest prices we are capable of. If there are any specifics on products we can help explain, we are glad to do so.

    We want to wish everyone health and thank you for your business. We look forward to serving you again soon.

    From the El Rey Family to yours"


    Menards officials did not respond to FOX6's request for comment.

    To report suspected price gouging, please download a complaint form from the DATCP website and submit it via email to DATCPHotline@wisconsin.gov.

    Be prepared to provide the following information: