Covid-19 Scam Complaints Double In A Week, But FTC Enforcement Considers 'Good Faith' Factor

FTC pursuing bogus health and other products or services capitalizing on Covid-19 fear with scams skyrocketing. However, FTC says its enforcement will consider whether businesses are making good faith efforts to produce products in high demand.

The Federal Trade Commission is investigating scammers pushing bogus health and wellness and other types of products or services related to the Covid-19 outbreak while also considering enforcement flexibility for companies making good faith efforts to meet surging demand for certain products.

The FTC stated on 30 March that outbreak-related shopping- and mobile-texting scams and government imposter communications are skyrocketing as the US infection rate increases.

It said that for 2020 through 23 March, it received around 3,900 800 reports from consumers about Covid-19-related deception. The total doubled in the following week, though.

The complaints include 655 reports to the FTC’s “Do Not Call” registry about bogus marketing calls, with 134 referencing health care products and supplies and 95 medicine and prescription drugs, according to the FTC.

In complaints that mentioned Covid-19, consumers reported losing a total of $4.77m, with a reported median loss of $598.

The scams hit as the Covid-19 infection rate in the US reached 163,539 cases, with 2,860 deaths, according to the Centers for Disease Control and Prevention's 31 March update.

“We are working closely with federal and state law enforcers, and with other stakeholders, including consumer advocates and the business community, and are devoting significant resources to tackling scammers and unfair and deceptive business practices,” FTC Chairman Joseph Simons said in a 26 March blog post.

The FTC along with the Food and Drug Administration has sent warning letters to firms attempting to capitalize on consumer fears with fraudulent claims about products (see sidebar article).

Enforcement Will Consider ‘Good Faith’ Work

As the FTC is cracking down on deception, it is providing some flexibility to health and wellness firms and others that in “good faith” are trying to produce products to meet public needs, such as medical masks, gloves and hand sanitizers, Simons said.

“Over the next few weeks, the FTC will remain flexible and reasonable in enforcing compliance requirements that may hinder the provision of important goods and services to consumers. To be clear, by being flexible and reasonable, I am not suggesting that we will tolerate companies deceiving consumers, using tactics that violate well-established consumer protections, or taking unfair advantage of these uniquely challenging times,” he added.

DoJ Also On Covid-19 Scam Alert

The Department of Justice on 24 March posted an online warning to consumers about Covid-19 scams being reported to US attorneys' offices:

• sales of counterfeit or fake testing kits, cures, “immunity” pills and protective equipment;

• robocalls making fraudulent offers to sell respiratory masks with no intent of delivery;

• social media scams fraudulently seeking donations or claiming to provide stimulus funds if recipients enter bank account information;

• fraudulent offers for free Covid-19 testing to obtain Medicare beneficiary information used to submit false claims for unrelated, unnecessary or fictitious testing or services.

Across the US, states' attorneys general also are receiving and investigating reports of Covid-19 scams. (Also see "State Agencies Sharpen Supplement Market Oversight During Pandemic, With Industry's Thanks" - HBW Insight, 29 Mar, 2020.)

Good faith efforts undertaken to provide needed goods and services will be considered in making enforcement decisions, he said. The FTC said it will advise companies seeking guidance on compliance obligations on consumer protection issues.

The FDA is encouraging companies with capability to switch manufacturing to making hand sanitizers, with guidance issued on 14 March stating it will not enforce some prohibitions against compounders preparing nonprescription ethyl and isopropyl alcohol-based hand sanitizers. The guidance notes state-licensed pharmacies or federal facilities and registered outsourcing facilities can prepare alcohol-based sanitizers for consumers if certain conditions are met. (Also see "US Consumers' Hand Sanitizer Resources Expand: FDA Allows Compounding During Pandemic" - HBW Insight, 18 Mar, 2020.)

Distilleries are stepping up to produce hand sanitizer for their communities. According to distillery trade group Distilled Spirits Council of the United States, almost 600 distilleries across the us are producing the products in some capacity.

Bob Durkin, an attorney for Arnall Golden Gregory LLP and former deputy director of the FDA’s supplements program, recently told HBW Insight that many supplement firms are capable of easily switching manufacturing to OTC drugs or even Rx production, including registering with and receiving the FDA’s clearance for drug production. (Also see "Pandemic Could Turn Supplement Firms To Drug Production, Helping Fill Public Health Gaps" - HBW Insight, 24 Mar, 2020.)