As COVID-19 becomes a more prevalent part of everyday life, federal and state regulators have made it clear that they will aggressively enforce consumer protection laws against companies that seek to take improper advantage of the COVID-19 pandemic.

In a March 26, 2020, statement, Federal Trade Commission Chairman Joe Simons strongly condemned businesses who engage in unfair and deceptive business practices during the COVID-19 pandemic. Chairman Simons stated that the FTC was working with federal and state law enforcers, consumer advocates, and business owners to protect consumers from companies who seek to take advantage of consumer fears regarding COVID-19. As we previously blogged, the FTC, along with the Food and Drug Administration, began taking action against these companies by issuing warning letters to seven sellers of unapproved or misbranded products which claimed that their products could treat or prevent COVID-19. In their respective statements regarding these warning letters, the FTC and FDA indicated that these warnings were only a first step and committed to aggressively pursuing companies who seek to take advantage of consumers during this national emergency. The FTC also published information about Coronavirus-related complaints from consumers, noting the significant number of Coronavirus-related complaints reported from consumers this year.

In addition, multiple states, in connection with the Department of Justice, have formed COVID‑19 task forces to target specific activities related to COVID-19. In addition to targeting price gouging, the task forces are on the lookout for alleged “treatment scams” (offers to sell fake cures, vaccines, and advice on unproven treatments for COVID-19); “supply scams” (where companies create fake shops, websites, social media accounts, and email addresses claiming to sell medical supplies currently in high demand, such as surgical masks, without ever delivering the supplies); and “provider scams” (companies contacting consumers, posing as healthcare providers that treated a friend or relative for COVID-19, and demanding payment for that treatment). Additionally, the task forces are targeting allegedly deceptive charities soliciting donations for COVID-19 victims and alleged investment scams. According to the task forces, they are also targeting companies which offer direct financial assistance to consumers (i.e. phony government checks) and programs that claim to work for the government, banks, or credit card companies which offer student loan relief, foreclosure or eviction relief, unemployment assistance, or debt relief. Finally, the task forces announced their intent to enforce consumer protection laws against companies engaged in phishing and malware schemes using COVID-19 as a pretext.

The Department of Justice made it clear that it will not hesitate to bring legal action against companies who engage in this type of consumer deception. The DOJ already filed a civil complaint, and the court issued a temporary restraining order, against the operators of a website that allegedly engaged in wire fraud by offering consumers access to World Health Organization vaccine kits in exchange for a shipping charge of $4.95.

Further, a bipartisan coalition of 34 senators wrote a letter addressed to Chairman Simons calling on the FTC to take more action to protect and inform consumers against COVID-19 related scams which target senior citizens. Scammers have targeted senior citizens by telling them that a COVID-19 vaccination exists when it does not while other scammers have shown up to senior citizens’ homes and performed fake COVID-19 tests, charged them, and obtained their social security numbers.

While the FTC did not immediately respond to requests for a comment about this letter, FTC staff sent warning letters to nine companies cautioning them to consider the consequences for assisting companies who participate in illegal COVID-19 promotions. These warning letters were sent to providers of Voice over Internet Protocol (VoIP) services and companies that license telephone numbers to companies involved in making robocalls for these unlawful activities. The letters reminded the VoIP providers that under the FTC Act and the Telemarketing Sales Rule, “assisting and facilitating” others involved in unlawful robocalling is also illegal.

However, FTC Chairman Simons issued a statement that the Commission “will remain flexible and reasonable in enforcing compliance requirements that may hinder the provision of important goods and services to consumers” as long as companies make “good faith efforts” to comply with applicable regulations. While the FTC repeatedly stated that it is committed to protecting consumers, it also understands that during this time companies are under pressure to distribute necessary products and services quickly. So, the FTC will consider a company’s good faith efforts when determining enforcement actions. This statement shows how the FTC, along with the DOJ and state governments, are balancing companies’ efforts to provide essential goods and services while also demonstrating that they will not hesitate to take action against companies who they believe are taking advantage of consumer fears during the COVID-19 pandemic.

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Photo of Leonard L. Gordon Leonard L. Gordon

Len Gordon, chair of Venable’s Advertising and Marketing Group, is a skilled litigator who leverages his significant experience working for the Federal Trade Commission (FTC) to help protect his clients’ interests and guide their business activity. Len regularly represents companies and individuals in…

Len Gordon, chair of Venable’s Advertising and Marketing Group, is a skilled litigator who leverages his significant experience working for the Federal Trade Commission (FTC) to help protect his clients’ interests and guide their business activity. Len regularly represents companies and individuals in investigations and litigation with the FTC, state attorneys general, the Department of Justice (DOJ), and the Consumer Financial Protection Bureau (CFPB). Len also represents clients in business-to-business and class action litigation involving both consumer protection and antitrust issues. He also counsels clients on antitrust, advertising, and marketing compliance issues.

Shahin O. Rothermel

Shahin Rothermel counsels and defends clients on issues involving advertising, marketing, e-commerce, privacy, social media, promotions, sweepstakes, and subscription programs. Shahin regularly represents clients before the Federal Trade Commission (FTC), state attorneys general, district attorneys, the National Advertising Division (NAD), the National Advertising…

Shahin Rothermel counsels and defends clients on issues involving advertising, marketing, e-commerce, privacy, social media, promotions, sweepstakes, and subscription programs. Shahin regularly represents clients before the Federal Trade Commission (FTC), state attorneys general, district attorneys, the National Advertising Division (NAD), the National Advertising Review Board (NARB), and the Electronic Retailing Self-Regulation program (ERSP), in addition to handling complex consumer class actions and competitor disputes in federal and state courts.