Global COVID-19 Threats Persist as Online Fraud and Theft Continue

May 28, 2020

Topics: Internet Pharmacies, Coronavirus disease 2019 (COVID-19)

Written by: Matthew Rubin, Faegre Drinker Consulting

Now more than two months into the United States’ public health emergency for the coronavirus disease 2019 (COVID-19) pandemic, consumer behavior and related commerce have changed drastically. Stay-in-place orders, social distancing practices, and self-imposed quarantines have left hundreds of millions of Americans – and billions more globally – confined to their homes for an uncertain period of time. With limited access to shopping malls, big-box retailers, and other normalcies we once took for granted, consumers are now looking online to fill that void. Online purchases have also extended to prescription drugs, supplements, and personal protective equipment (PPE). Unfortunately, as we have previously reported, online criminals have quickly shifted to COVID-19-related schemes, preying on consumer misinformation and fear for a quick profit.

In the US alone, the Federal Trade Commission (FTC) has received more than 55,000 complaints related to COVID-19 fraud nearing $41 million in total losses. On May 7, 2020, FTC announced issuance of 45 warning letters related to unsubstantiated claims based on the prevention, treatment, and/or cure of COVID-19. Upwards of 100 individuals and companies have now received warning letters from FTC for COVID-19-specific infractions. Fifty-two additional warning letters have been issued jointly between FTC and Food and Drug Administration (FDA) for unapproved and misbranded products related to the COVID-19 pandemic.

As quickly as US regulators and enforcement officials are able to address alleged illegal activity, new strings of fraud and related consumer risks pop up elsewhere. It is also worth noting that fraud and theft are not limited just to pharmaceuticals and PPE but also research and data, with the Federal Bureau of Investigations and Cybersecurity & Infrastructure Security Agency warning of attempts at research and intellectual property theft.

The threat to patient health and safety is not limited to the US, however, as European Union officials continue to catalog ongoing instances of fake COVID-19 treatments, cures, and related products online. As of May 13, 2020, the European Commission’s European Anti-Fraud Office (OLAF) indicated that it had identified more than 340 individual corporate entities that  were responsible for the facilitation of counterfeit and substandard product sales throughout member states. OLAF officials have launched an online cyber task force geared specifically toward mitigating potential harms from internet criminals and removing infringing websites. These criminal networks are vast and leverage fake conformity certificates and quality marks to instill false confidence in consumers.

In response to the ongoing threats posed by illegal internet activity focused on COVID-19, OLAF Director General Ville Itälä noted, “Pooling knowledge and resources from all over the world is the only way to prevent counterfeit, substandard and ineffective products from entering Europe, to fight money laundering and ultimately to dismantle the criminal organizations behind this potentially life-threatening activity.”

Ultimately, FDA’s recent Operation Quack Hack has demonstrated the pervasiveness of coronavirus fraud and the threat that ill-gotten profits could have on our global response. Agency officials note the continued availability of fraudulent and substandard drugs, testing kits, PPE, and medical devices. Efforts should be made to augment and amplify efforts by FDA and others to “work with online marketplaces, domain name registrars, payment processors and social media websites to remove from their platforms products that fraudulently claim to mitigate, prevent, treat, diagnose or cure COVID-19 and to keep those products from reappearing under different names.” The stakes have simply never been higher, nor the implications more dire.