As reported, federal, state and local law enforcement authorities are seeing an explosion of COVID-19-related scams as fraudsters try to capitalize on public panic over the disruptions caused by the pandemic. The Federal Trade Commission recently disclosed that the number of coronavirus-related complaints it had received from consumers doubled during the previous week, reaching more than 7,800.
These scams threaten not only the most vulnerable individuals among us but companies and their employees, security systems and trade secrets as well.
The scams range from the ludicrous to the sophisticated. At a convenience store parking lot in Louisville, a white banner advertised “COVID-19 Testing Here.” Drivers paid $240 and disclosed their social security numbers and credit card information to have their mouths swabbed by workers in white hazmat suits. The tests were fake, and the personal information disclosed used for identity theft.
Disgraced televangelist Jim Bakker offered a “Silver Solution” for a $125 bottle of gel pills claiming they were effective to stop coronavirus. Bakker, who was convicted in 1989 on multiple counts of fraud after he stole millions of dollars in a fundraising scandal and spent five years in prison, returned to TV in 2003. On his television program, a so-called “natural health expert” named Sherrill Sellman falsely implied that the liquid gels would be effective. “Well, let’s say it hasn’t been tested on this strain of the coronavirus, but it has been tested on other strains of the coronavirus and has been able to eliminate it within 12 hours,” Sellman said. “Totally eliminate it. Kills it. Deactivates it.”
Attorneys General around the country responded quickly. Missouri filed suit seeking a Temporary Restraining Order enjoining and prohibiting Bakker and any other individuals acting on his behalf or at his direction from selling, offering for sale or advertising Silver Solution as a treatment for coronavirus. New York Attorney General Letitia James sent cease and desist letters to both Bakker and Sellman for marketing the “Silver Solution” and “Micro-Particle Colloidal Silver Generator” as successful treatments and cures for COVID-19.
In addition to individuals and businesses selling fake cures for COVID-19 online and engaging in other forms of fraud, there are other more sophisticated scams including:
- Phishing emails from entities posing as the World Health Organization or the Centers for Disease Control and Prevention
- Malicious websites and apps that appear to share virus-related information to gain and lock access to devices until payment is received
- Solicitations for fraudulent donations for illegitimate or non-existent charitable organizations
In response to these scams, the Justice Department has set up a task force to investigate price-gouging and prosecutors have been instructed to prioritize fraud cases. In a letter to all United States Attorneys, Attorney General William Barr advised that:
. . . it is essential that the Department of Justice remain vigilant in detecting, investigating, and prosecuting wrongdoing related to the [coronavirus] crisis. In particular, there have been reports of individuals and businesses selling fake cures for COVID-19 online and engaging in other forms of fraud, reports of phishing emails from entities posing as the World Health Organization or the Centers for Disease Control and Prevention, and reports of malware being inserted onto mobile apps designed to track the spread of the virus. The pandemic is dangerous enough without wrongdoers seeking to profit from public panic and this sort of conduct cannot be tolerated. Every U.S. Attorney’s Office is thus hereby directed to prioritize the detection, investigation, and prosecution of all criminal conduct related to the current pandemic.
Additionally, the Food and Drug Administration has issued 16 warning letters to companies including Health Mastery Systems, Gaia’s Whole Healing Essentials, LLC, JRB Enterprise Group Inc. and Corona-cure.com for selling homeopathic drug products, colloidal silver products and others as cures or prophylactic remedies for COVID-19. Similarly, the Environmental Protection Agency has threatened legal action against retailers that sell unregistered disinfectants and sanitizers that falsely claim to protect against the virus.
What Can Individuals Do?
The FTC has issued guidelines for individuals on how to protect against scams of all types. Included among these recommendations are the following:
- Hang up on robocalls. Even if the recording says that pressing a number will remove you from a call list, it may lead to more robocalls, instead.
- Ignore online offers for vaccinations and home test kits. There are no FDA-authorized home test kits for the Coronavirus.
- Fact-check information.
- Do not pass on messages unless they are from trusted sources. (Think of this as informational social distancing – before you pass along the message from the friend who has a friend who works for the government, verify the truth of the message).
- Know who you’re buying from.
- Do not respond to texts or emails about checks from the government.
- Do not click on links from sources you don’t know. They could download viruses onto your computer or device.
- Watch for emails claiming to be from the Centers for Disease Control and Prevention (CDC) or experts saying they have information about the virus.
- Do your homework when it comes to donations, whether through charities or crowdfunding sites. Don’t let anyone rush you into making a donation. If someone wants donations in cash, by gift card, or by wiring money, don’t do it.
What Should Companies Do?
The FTC has similarly offered information on scams that particularly target businesses. Among the warnings of particular scams targeting businesses, it provides as examples:
- The CEO scam. In this scam, an employee gets a message that appears to come from a company higher-up directing the person to wire money, transfer funds, send gift card codes, etc. In reality, a con artist has spoofed the boss’ email address or phone number.
- The I.T. Scam. Like a CEO scam, this time the call or message claims to come from a member of your technology staff asking for a password or directing the recipient to download software. These scams pose a particular problem now due to what cybercrime experts call social engineering: the dark art of manipulating human behavior to facilitate fraud. Employees already may be distracted by changes to their routine and the tech support team is swamped. Taking advantage of this temporary “upside down-ness,” con artists may do a quick online search to glean a tidbit to really sell their story – for example, “I spoke with Fred, who said you were having a computer problem” or “The meeting has been shifted to our new teleconferencing platform. Here’s the link.”
- Supplychain Scams. With businesses scrambling for supplies, it’s wise to heed warnings about websites that mimic the look of well-known online retailers. They claim to have the essentials you need, but in reality, they’re fakes that take your “order,” grab your credit card number and run. The safer strategy is to type in URLs you know to be genuine. And before taking a chance on an unfamiliar supplier, check them out with trusted industry colleagues.
Conclusion
Working closely with your IT departments, continue monitoring all firm systems for unusual activity. Educate workers who are using home computers about the dangers that phishing scams can pose to company interests. Insist that employees report if they have been a victim of any phishing scam that may impact company security or systems. Caution employees that emails or other messages from addresses such as HR@companyname.com or other unfamiliar addresses should never be opened. Give employees a central in-house contact where they can verify requests they may receive.
For more information or to discuss further, please reach out to David Posteraro at drp@kjk.com or 216.736.7218.