Paragon USA Hit with $10,000 Fine for Gouging Baby Formula Prices

New York Attorney General Letitia James has imposed a $10,000 penalty on Paragon USA & Co., LLC (Paragon) for gouging baby formula prices during the critical shortage of 2022. The fine is part of a settlement that also includes a donation of over $13,500 worth of baby formula to Brooklyn families.

Attorney General James’ office investigated Paragon for raising prices more than 20 percent after Abbott Laboratories announced its recall of formula, leading to skyrocketing costs and widespread hardship across New York and the nation. The plant closure by Abbott, which produces over 40% of U.S. infant formula, was a significant factor in the shortage.

In addition to the penalty, Paragon is required to donate $35,000 worth of baby formula as part of the settlement. This brings the total value of donations secured by Attorney General James from price gouging settlements to over $700,000.

Today’s donation marks the fourth and final delivery of baby formula from Paragon, which will be distributed by Mixteca, a community organization serving Latino communities in Brooklyn. ‘Companies should never be able to raise prices and squeeze extra profits from struggling New Yorkers during a crisis,’ said Attorney General James.

Mixteca Executive Director Lorena Kourousias expressed gratitude for the donation, stating, ‘This support ensures that families in our community have access to essential nutrition for their little ones during a time of great need.’

The OAG’s investigation found that Paragon generated tens of thousands of dollars in additional revenue through price hikes. New York’s price gouging laws prohibit vendors from raising prices on vital goods during market disruptions, such as the baby formula shortage.