Samuel Levine, director of the Federal Trade Commission (FTC) Bureau of Consumer Protection, told a Senate subcommittee Feb. 1, 2022, that the bureau planned to take aggressive steps to stop pandemic predators in their tracks.
"During the course of this pandemic, we have encountered disturbing trends and surging complaints as Americans are being targeted by predators large and small, with schemes including get-rich-quick opportunities, bogus cures, false promises of economic assistance, and counterfeit personal protective equipment (PPE)," Levine said.
Amount of fraud losses due to COVID-19 scams as of Jan. 28, 2022.
Levine outlined the FTC's planned 3-step comprehensive approach to addressing COVID-19-related fraud:
- Engagement with law enforcement to halt and deter COVID-19-related deceptive claims.
- Continued collection and analysis of data in the FTC's Consumer Sentinel Network to identify consumer fraud trends.
- Continued outreach and consumer education including proactive use of social media, video streaming conferences, and other methods to reach historically underserved communities and people in economically and geographically diverse communities.
“The Commission will remain vigilant in protecting the public from harms that stem directly and indirectly from the COVID-19 pandemic," Levine stated adding that the FTC was committed to proactively adjust strategies as necessary to tackle emerging threats at the local, state, and federal levels.
- The FTC announced Feb. 1 plans to take on COVID-19-related scams designed to defraud consumers.
- FTC Consumer Protection Director Samuel Levine, said that as of January 28, 2022, the agency has received more than 292,000 reports reflecting $674 million in fraud losses.
- Levine outlined the FTC's planned three-prong attack including engaging law enforcement, data collection and analysis, and continued consumer education to reach vulnerable populations.
- The COVID-19 Consumer Protection Act of 2020 has enhanced the FTC's ability to deter deceptive COVID-19-related scams.
- A 19-fold increase in online scams has been partly attributed to a move to work-at-home, online schooling, and a general increase in the use of online resources during the pandemic.
- An increase in the impersonation, both online and by phone, of government agencies and businesses has resulted in more than $451 million in reported fraud.
Enhanced Law Enforcement Action Key
A key element of the FTC's aggressive approach is the ability to deploy new tools provided under the expanded authority of the COVID-19 Consumer Protection Act of 2020. These tools, the agency says, allow it to take action to halt and deter deceptive COVID-related claims.
So far the FTC says it has pursued cases against more than a dozen COVID-19 predators, with more investigations already underway. The FTC also issued cease-and-desist demands to more than 425 companies making false or unsubstantiated COVID-19 claims. These orders give companies 48 hours to stop their scams or face federal charges.
Additionally, the agency notified state and local authorities about possible criminal conduct and contacted online companies to let them know scammers were using their platforms to break the law. According to the FTC, the prospect of federal litigation or criminal charges has proven effective against these mostly small fly-by-night outfits that don't have the resources to fight the government.
Online Scams Have Spiked
As both work-related, education, and household activities have moved online, the FTC notes that it is seeing a significant spike in digital scams. Victim testimony suggests that scammers have been quick to take advantage of these changes, resulting in record reports of financial losses.
The increase in the number of reports about people losing money to a scam that began with a contact on social media between 2017 and 2021.
Top complaints include reports of business and government imposters, undelivered merchandise, and losses stemming from online shopping. Incidents of cryptocurrency and other investment and income scams have also risen sharply during the pandemic. Another area of concern has been the increasing incidence of fraud related to medical treatment. According to the FRC, much of this digital deception is originating on social media. The agency reports that between 2017 and 2021, there has been a 1900% increase in the number of reports about people losing money to a scam that began with a contact on social media.
Impersonation of Federal Agencies Is Up
One area of special concern has been a significant rise in impersonation fraud. It is not unusual, historically, for scammers to falsely claim that they are calling from the IRS, the Social Security Administration, or other offices or businesses. What's alarming, the FTC says, is the increase in these types of contacts during the pandemic. Consumer financial losses to business imposter scams alone were more than $451 million in 2021 alone. Reports from consumers rose more than 300% between 2019 and 2021.
Levine noted in his testimony that one significant challenge when it comes to fraud has been the 2021 Supreme Court ruling in AMG Capital Mgmt., LLC v. FTC, which held that the FTC does not have the ability to obtain monetary relief under Section 13(b) of the FTC Act. "Returning money to defrauded consumers has been a fundamental part of the FTC’s consumer protection mission," Levine said.
FTC Proposed Rule to Seek Refunds for Consumers
In the meantime, the agency has launched an advanced notice of proposed rulemaking to combat government and business impersonation fraud. The proposed rule would enable the Commission to seek refunds for consumers under its Section 19 authority, in addition to civil penalties. The FTC says that in addition to targeting its enforcement resources towards investigating fraud, it is reviving some of its older tools to address the new trends it is seeing.
This past October, for example, the Commission, using its Penalty Offense Authority, sent Notices to more than 1,100 businesses regarding deceptive or misleading earnings claims and fake reviews and other misleading endorsements. It also sent notices to 70 for-profit colleges regarding deceptive or misleading job and earning prospects.
COVID-19 Tests Are Free
Every home in the U.S. can receive 4 free at-home COVID-19 tests through the United States Postal Service. Orders typically ship in 7-12 days.
FTC Offers Advice to Avoid Coronavirus Scams
As noted by the FTC, the pandemic has given rise to a growing number of scams, schemes, and other shady COVID-19-related offerings. In addition to actions it is taking, the agency lists provides the following list of tips for consumers:
- COVID-19 vaccines are free. If someone tries to charge you to sign up for the shot, it’s a scam.
- You can’t buy the COVID-19 vaccine. It's only available at federal- and state-approved locations.
- Talk with your doctor or healthcare professional before trying any product that claims to treat, prevent, or cure COVID-19.
- Don’t post your COVID-19 vaccination card to social media. It could allow someone to steal your identity.
- The government has no current plans to create a national vaccine verification app or certificate or passport. Any solicitation regarding any of these is a scam.
- Contact your state government at its COVID-19 information website about the state's plans regarding vaccine verification or requirements.
- Check with specific airlines, cruise lines, and event venues regarding their vaccine verification or negative testing requirements.
- When seeking pandemic-related help start with sites such as: coronavirus.gov and usa.gov/coronavirus.