Markets Wired

The Federal Trade Commission testified today before the Senate Commerce Committee Subcommittee on Manufacturing, Trade, and Consumer Protection on its efforts to combat scams and other consumer problems related to the ongoing COVID-19 pandemic.

The testimony, delivered by Bureau of Consumer Protection Director Andrew Smith, outlined the FTC’s efforts to protect consumers from scammers seeking to take advantage of the pandemic. The FTC has been monitoring consumer complaints and the marketplace for a variety of scams related to the COVID-19 pandemic.

The FTC has seen deceptive advertising or marketing touting “miracle cures” for COVID-19, the testimony noted. To get these false treatment claims taken down as quickly as possible, the FTC has sent more than 250 warning letters to marketers regarding claims that their products will treat, cure, or prevent COVID-19. In most cases, companies that have received such letters take steps to quickly correct their problematic claims. The FTC, however, reiterated that it will pursue law enforcement action when a warning letter does not stop the problem.

The FTC also has sent warning letters to multi-level marketing companies regarding COVID-19 prevention or treatment claims and earnings claims, Voice over Internet Protocol (VoIP) service providers for “assisting and facilitating” illegal telemarketing or robocalls related to the COVID-19 pandemic, and to companies making claims that could lead consumers and small businesses to believe these companies are somehow affiliated with the Small Business Administration.

The FTC testimony also detailed COVID-19-related complaints it has received from consumers. Complaints related to online shopping has emerged as the top coronavirus-related consumer complaint to the FTC. These complaints are, in part, about merchants that offer masks, personal protective equipment, and related products for sale but then fail to ship the promised products, fail to meet their delivery promises, or ship products other than those advertised, and fail to provide refunds to consumers.

The FTC has worked aggressively to educate consumers about coronavirus-related scams from the beginning of this crisis. The FTC has set up a separate web page—FTC.gov/coronavirus—with consumer and business alerts, law enforcement actions, consumer report data, and other details about the FTC’s efforts to combat coronavirus-related scams and educate consumers.

In addition to its work to stop pandemic-related fraud, the FTC testimony also highlighted its non-COVID related work to help consumers including distributing $40 million in refunds to consumers since early March. In addition, the FTC has announced complaints or settlements in more than 30 law enforcement matters, including settlements that will return more than $225 million to consumers. In its testimony, the FTC noted that getting money back for consumers from scammers is an important part of the FTC’s mission but that tool is now at risk as a result of recent judicial decisions. The FTC urged Congress to pass legislation that would clarify that the agency does have authority under the FTC Act to obtain money for consumers from fraudsters and scammers.

The Commission voted 4-0-1 to approve the testimony before the Senate subcommittee. Commissioner Rebecca Kelly Slaughter did not participate.