Lawmakers call for increased federal authority to combat COVID-19 scams

Senate lawmakers on Thursday said the federal government must do more to prevent price gouging and other scams targeting consumers seeking protection against COVID-19.

During a hearing titled “Stopping COVID-19 Fraud and Price Gouging” on Thursday afternoon, Sen. Richard Blumenthal, chair of the Senate subcommittee on consumer protection, product safety and data security, said he has received 800 reports of price gouging in his state of Connecticut alone while stating a “lack of sufficient authority” in the federal government is a major cause of the problem.

“There is a glaring lack of enforcement at the federal level,” Blumenthal, D-Conn., said. “The federal government, including the Federal Trade Commission and the Department of Justice have few legal tools to hold price gougers accountable. That is a glaring gap in the law that needs to be corrected.”

Blumenthal added that he planned to introduce legislation “that will enable federal forces to do more and protect consumers in Connecticut from these price gougers and scammers.”

Ranking member Sen. Marsha Blackburn, R-Tenn., asserted that states attorneys general are best equipped to combat the fraudsters.

Todd Leatherman, program counsel for the National Attorneys General Training & Research Institute Center for Consumer Protection, said that state attorneys can face challenges due to the volume of cases.

“Obviously AG offices have limited resources and so being able to address all of these issues is a challenge,” he said, while confirming that attorneys general have the legal authority to handle such cases.

Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said the agency has taken steps to combat price gouging and fraud, including engaging law enforcement to stop and deter COVID-related scams, collecting and analyzing data to identify consumer fraud trends and using social media and other forms of outreach to educate consumers.

He added, however, that the “battle remains uphill so long as the digital platforms continue to wash their hands of the fraud that they are facilitating,” referring to both social media companies and online marketplaces which he said avoid responsibility for such fraud under Section 230 of the Communications Decency Act.

“It’s crazy to me that two years into this pandemic, consumers still can’t go on an e-commerce platform and have confidence that the mask they buy is authentic,” he said. “Nobody, not e-commerce platforms and not the scammers, should be profiting from the sale of defective masks that are not only cheating consumers of money but that are putting public health at risk, but unfortunately that is exactly what is happening and the platforms are not taking enough responsibility for the fraud they are facilitating.”

Mary Engle, executive vice president for policy at the Better Business Bureau, said she would like to see increased partnership with the group to combat misleading advertisements.

“When we see misleading ads on their platforms and the advertiser doesn’t comply with our decision we could refer them to the platforms,” she said. “Facebook actually has already agreed to do that and so when we refer matters to them, misleading ads violate their terms of service and promptly take them down and we would like to have that same partnership with the other platforms as well.”

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