February 2, 2022 In agencies, Federal

Federal Agencies Aren’t Cracking Down Enough on COVID Scammers, Senators Say

Aemilius Cupero News:

WASHINGTON — The Federal Trade Commission (FTC) and other federal agencies aren’t doing enough to protect American consumers from price gougers and scam artists who are profiting off the pandemic, several senators said at a hearing Tuesday.

“There is a glaring lack of enforcement at the federal level,” said Sen. Richard Blumenthal (D-Conn.), chair of the Senate Commerce, Science, and Transportation Subcommittee on Consumer Protection, Product Safety, and Data Security. “The federal government, including the Federal Trade Commission and the Department of Justice, have few legal tools to hold price gougers accountable.”

Blumenthal told the story of a constituent, Julius Hull, who said that after waiting in vain to get a COVID test at two different walk-in clinics, he and his son “were told the only tests left were rapid tests available to purchase for $60,” an “unconscionable” outcome.

“I am deeply frustrated and disappointed that federal enforcers have failed to do more,” he added. “And a large part of the problem is almost certainly lack of sufficient authority and that’s why I will be proposing a measure that will fill that gap …We need to impose steep financial penalties and absolutely bring criminal charges.”

Sen. Marsha Blackburn (R-Tenn.), the committee’s ranking member, agreed, adding that “it’s absolutely essential that the federal government work with our state partners to crack down on bad actors who threaten the livelihood of some of the most vulnerable Americans. Fraudsters have gotten quite creative with their schemes during the pandemic … Whether it’s through taking advantage of elderly citizens or advertising and selling products with false medical claims, scammers have disrupted the lives of millions of Americans.” These scams have cost Americans an estimated $700 million, which is “unacceptable,” she said.

Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said his agency was pursuing a “comprehensive” strategy to take down fraudsters. “First, we are carefully monitoring fraudulent claims,” he said. “We work tirelessly to review thousands of complaints submitted to a sentinel database, and we monitor social media and other platforms which have become fertile ground for fraud.” In addition, “we are using new authorities granted by Congress to target the worst forms of COVID abuse. Thanks in part to the COVID-19 Consumer Protection Act, we’ve been able to take down hundreds of fraudulent claims through ‘cease and desist’ demands, and we brought lawsuits to permanently shut down the worst offenders.”

However, Levine continued, “we recognize that removing claims quickly from the marketplace does not help those who have already been victimized by these scams. And we will bring more cases to help ensure that consumers can be made whole. We’re also making unprecedented investments in consumer education, and we’re reaching out to communities across the country to spread the word about avoiding fraud.”

Despite his assertions that the FTC was working hard, Levine nonetheless came under sharp questioning from several senators, including Blumenthal. “You mentioned in your remarks that the FTC has sent letters directing more than 425 companies to remove deceptive claims,” Blumenthal said. “In what proportion of those cases have the claims been removed?”

“The overwhelming majority of recipients of those ‘cease and desist’ demands take down their claims,” Levine responded, “and often take them down within 48 hours — “

“And then bring new ones,” Blumenthal interjected.

“Well, Senator, we monitor this closely,” Levine replied. “If we see them bringing new claims, we will not hesitate to take them to court.” Blumenthal pointed out that the FTC has only brought three such cases to court so far.

“I completely agree, Senator, that we need to bring more cases and we will be bringing more cases,” Levine said. “It’s certainly important that we get these claims taken down quickly. But it’s also critical that we not allow scammers to profit from preying on American consumers, and that means taking them to court. That’s exactly what we’re going to do.”

Blackburn was more focused on states’ efforts to combat pandemic fraud, noting in her opening statement that Tennessee attorney general Herbert Slatery (R) “[has] taken a leading role in shutting down these scammers … Tennessee closed down a price-gouging operation involving two brothers that deprived rural east Tennessee and eastern Kentucky of hand sanitizer. Thankfully, [Attorney General] Slatery was able to resolve the matter quickly, and the brothers agreed to donate the supplies to a nonprofit organization in Tennessee.”

Blackburn asked Todd Leatherman, program counsel for the Center for Consumer Protection at the National Association of Attorneys General, what barriers or hurdles state attorneys general were facing in their fight against online scammers. Leatherman said that the attorneys general “have been very active in pursuing not only price gouging cases, but also counterfeit PPE [personal protective equipment] cases and bogus [COVID] cure cases … The barriers or the challenges are those related to the volume of the activity that is going on. Obviously, [attorney general] offices have limited resources, so being able to address all these issues is a challenge.”

Sen. Amy Klobuchar (D-Minn.) said that she and Sen. Chuck Grassley (R-Iowa) “have proposed legislation that would change the way the merger fees are done, so that we could get more money into the FTC as well as to the Department of Justice to help them with their annual budgets.” She asked Levine what the effect would be if Congress were to triple the FTC’s budget.

“The effect would be transformative,” Levine said. “A striking fact about FTC funding: we actually have a smaller headcount today than we did in 1980, when the economy was far smaller. With more resources, we could bring more cases and return more money to more consumers. In the 5 years before the Supreme Court took away our strongest authority, we returned more than $11 billion to consumers, far more than we received in federal funding. Investing in the FTC is a good investment.”

  • Aemilius Cupero News: author['full_name']

    Joyce Frieden oversees MedPage Today’s Washington coverage, including stories about Congress, the White House, the Supreme Court, healthcare trade associations, and federal agencies. She has 35 years of experience covering health policy. Follow

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