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Coronavirus Scammers Target Vulnerable Consumers

While COVID-19 spreads worldwide and panicked consumers rush to acquire pandemic essentials, scammers are out in full force. In the past few weeks, G2 has seen a dramatic increase in healthcare-related scams, especially in the following categories:

 

Protective Face Masks

Face mask fraud is rampant, as bad actors attempt to take advantage of vulnerable consumers. Fraudulent face mask websites: (1) predominantly sell face masks (rather than a broad array of medical equipment); (2) mention COVID-19 or coronavirus; and/or (3) contain text and images stolen from legitimate companies. Many of these domain names are brand-new (i.e., days or weeks old). These scammers also peddle their wares on e-marketplaces (usually with limited or poor reviews).

Consumers who fall prey to these fraudsters risk receiving shoddy masks that will not provide adequate protection; most commonly, however, face mask scammers simply fail to deliver the promised goods. According to news sources, one UK business owner lost £15,000 after buying a bulk load of protective face masks that never arrived. In the past two weeks alone, the Better Business Bureau’s ScamTracker has received over 25 reports of coronavirus-related scams in the US, several of which involve unfilled orders for protective face masks.

G2 has also found a number of websites selling antiviral badges that, when worn around user’s necks, purport to release chlorine and disinfect the air as the user moves around.

 

Illegal Online Pharmacies

While illegal online pharmacies are not new, these bad actors are definitely attempting to take advantage of vulnerable consumers. Since the onset of the coronavirus pandemic, rogue pharmacy networks have created new websites that actively promote the sale of antivirals without requiring a prescription. Of course, these products are likely substandard and falsified—and may even be dangerous.

One illegal online pharmacy, listed on the National Association of Boards of Pharmacy’s Not Recommended List, includes the phrase “coronavirus” in its domain name. The website opens to a page with scary and inaccurate information about coronavirus (including claims that the mortality rate is 40%) and then offers a thirty-day supply of “generic Kaletra” for $419.95. Kaletra is a brand-name antiviral that is currently being tested as a treatment for coronavirus.

 

         

 

Supplements Marketed with Claims to Treat or Prevent COVID-19:

G2 has also seen an increase in “all-natural” coronavirus “cures.” For example, one merchant claims that chaga (a mushroom) can “block” coronavirus, while another claims that saffron (a spice) can boost the immune system to protect against COVID-19.

 

         

 

Misleading claims are not a minor issue. According to Dharmesh Mehta, Amazon’s Vice President of Worldwide Customer Trust and Partner Support, Amazon has already removed more than one million products for making false claims related to the virus.

  

Home Test Kits

As many countries struggle to ramp up COVID-19 diagnostic testing, online scammers have begun to market bogus COVID-19 home test kits. In the past few weeks, G2’s Persistent Merchant Monitoring team has seen increasing numbers of these products for sale online, many of which claim to offer results “in 15 minutes or less.” It appears that these test kit sellers aren’t simply engaged in credit card theft. Earlier this week, the US Customs and Border Patrol seized a batch of fake COVID-19 test kits.

 

 

Websites Flagged by Regulators

Of course, G2 keeps on top of federal and state action regarding coronavirus scams. On March 9, 2020, the FDA and FTC issued joint warning letters to seven companies that sold fraudulent COVID-19 products (including teas, essential oils, tinctures, and colloidal silver). According to FTC Chairman Jim Simons: “These warning letters are just the first step. We’re prepared to take enforcement actions against companies that continue to market this type of scam.” To assist in this effort, the FDA has set up a cross-agency task force to monitor for fraudulent products related to COVID-19.

States are also taking action. Last week, the New York Attorney General ordered Alex Jones (of infowarsstore.com) to immediately cease and desist marketing toothpaste, dietary supplements, creams, and several other products as a treatment or cure for the coronavirus. According to the New York AG, Jones claimed that these products are a “stopgate” against the virus and that the US government has said his toothpaste “kills the whole SARS-corona family at point-blank range.”

The New York Attorney General also issued cease and desist notifications to The Silver Edge and Dr. Sherrill Sellman, who were marketing colloidal silver to treat or cure COVID-19. The Missouri Attorney General also filed suit against Jim Bakker and Morningside Church Productions for misrepresentations about the effectiveness of “Silver Solution” as a treatment for COVID-19.

 

Other Types of Fraud

While many unscrupulous merchants peddle fraudulent healthcare products, others sell coronavirus “survival guides.” Some of these products are offered on third-party marketplaces and others are available on survivalist websites. While not illegal, these e-books potentially include misleading claims and may be viewed by acquiring banks as reputation-damaging.

As the economy reels from this unprecedented event, G2 is also keeping an eye out for charity and investment fraud.

 

Conclusion

In the weeks and months to come, the payments industry will play a critical role in protecting vulnerable consumers from coronavirus-related fraud. The G2 team is working hard (from home!) to keep fraudulent merchants out of the payments ecosystem. We understand these times can be challenging, and we are here to help. If any questions arise, please do not hesitate to contact us at info@g2llc.com.

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