As businesses configure their workplaces to include new safety measures such as providing temperature checks, supplying necessary personal protective equipment (PPE) to employees, or installing hand sanitation stations, they must also be cautious of suspicious activities from fake suppliers, vendors, and other scammers attempting to exploit the current COVID-19 pandemic.
Last month, the Federal Bureau of Investigation (FBI) issued an alert warning state government agencies and health care industry buyers of rapidly emerging fraud trends related to the purchase of PPE, medical equipment such as ventilators, and other supplies or equipment in short supply during this pandemic. These fraud trends, also known as "supply scams," involve scammers creating fake shops, websites, social media accounts, and email addresses claiming to sell medical supplies currently in high demand, such as surgical masks. These fraudulent brokers and sellers typically require buyers to wire transferred funds in advance of receiving the items but never provide the supplies. In fact, the FBI reported one incident where an individual claimed to represent an entity the buyer had an existing business relationship. Unfortunately, by the time the business became suspicious of any fraudulent activity, most of the money had been transferred outside the reach of U.S. law enforcement and was unrecoverable.
The Federal Trade Commission (FTC) has also provided notice of scammers exploiting businesses. Recently, the FTC warned business owners planning to apply for a loan through the SBA's Paycheck Protection Program (PPP) or Economic Injury Disaster Loans (EIDL) program to take precautions. Apparently, scammers are attempting to impersonate loan lenders and may trick businesses into giving them sensitive business information, like bank account numbers, employees' Social Security numbers, and money. To find an SBA-authorized lender in your area, use this SBA tool.
As of April 21, 2020, the FBI's Internet Crime Complaint Center (IC3) has received and reviewed more than 3,600 complaints related to COVID-19 scams; and since May 6, 2020, the FTC has reported over 21,000 fraud related COVID-19 complaints.
In response to the uptick in COVID-19 related claims, many federal agencies have taken measures to find and prevent scams. For example, the FBI has prioritized its resources to detect, investigate, and prosecute these fraudulent acts. Also, according to an FTC press release, the FTC has issued several letters warning marketers throughout the United States to stop making unsubstantiated claims that their products and therapies can treat or prevent coronavirus (COVID-19). Furthermore, in a Food and Drug Administration (FDA) press release issued on May 7, 2020, the FDA acknowledged it is implementing steps to prevent the selling and distribution of unproven medical products. To date, the FDA has issued 42 warning letters to companies making fake COVID-19 claims.
As such, federal agencies are warning both individuals and businesses to be vigilant relative to these fraudulent schemes. For example, the DOJ urges individuals and companies to be wary of unsolicited emails offering information, supplies, or treatment for COVID-19 or requesting personal information for medical purposes. In addition, consumers should check online reviews of any company offering COVID-19 products or supplies, and avoid such companies whose customers have complained about not receiving items. For more details, see the FBI and DOJ's mitigation recommendations, tips, and examples of suspicious activity. According to the DOJ, fraudsters will continue to develop new ways to exploit this pandemic, requiring individuals and businesses to stay alert and informed.
For more information about COVID-19 scams and how to protect yourself, visit the Department of Justice website, the FBI website, and the FTC website.
Originally published May 12, 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
