FTC Chair Simons Defends Warning Letters for Online COVID-19 Fraud
Warning letters are the “most rapid and efficient means” for addressing bogus online claims about COVID-19-related products, FTC Chairman Joe Simons wrote, in documents we obtained through the Freedom of Information Act. Several members of Congress wrote in March asking how the agency is addressing the flood of deceptive and fraudulent activity related to the pandemic. Sen. Richard Blumenthal, D-Conn., asked about warning letters from the FTC and Food and Drug Administration.
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The commission “chose to proceed with warning letters before enforcement because we believe it is the most rapid and efficient means to address the problem,” Simons wrote on March 23 in response to Blumenthal’s March 9 letter. Simons noted that in past global health outbreaks, the FTC has often worked with the FDA to address fraudulent marketers. Simons listed efforts on the Zika virus, Ebola, the H1N1 flu, severe acute respiratory syndrome and anthrax contaminations.
Several members, including Blumenthal, urged the agency to review advertising practices of evangelist James Bakker, who allegedly claimed on his web show and website that his product Silver Sol successfully treats COVID-19 and cures venereal disease. The FTC sent warnings to seven marketers, including Bakker, noting there are currently no vaccines or products to treat or cure COVID-19. The FTC directed the companies to stop the activity or face enforcement.
Blumenthal’s office was “pleased to be notified that the companies ceased making those claims,” an aide said Thursday. “If we are made aware of companies continuing to make dangerous claims, the FTC must take immediate action to protect consumers and follow-up may be necessary.”
The agency didn’t comment Thursday. Neither did five of the seven entities: Vital Silver, Quinessence Aromatherapy, Vivify Holistic Clinic, Herbal Amy and The Jim Bakker Show. After the warning letter, GuruNanda “immediately removed any information related to treatment or prevention of COVID-19,” a spokesperson emailed, saying the company always strives to be compliant with the law. “Nothing we offer for sale is intended to mitigate, prevent, treat, diagnose or cure COVID-19 in people,” a spokesperson for N-ergetics emailed.
As of March 16, the agency received about 1,035 complaints involving COVID-19, Simons wrote Sens. Bob Casey, D-Pa., and Elizabeth Warren, D-Mass., on March 17. The FTC shared the complaints with the Consumer Sentinel Network, an online database for law enforcement.
“The majority of these COVID-19 scams have been promoted online,” Simons wrote. “We cannot tell at this point whether the marketers are targeting certain populations.” Asked about the adequacy of agency resources and authority, Simons said the FTC “can leverage its existing resources to respond to marketers hawking bogus COVID-19 cures to the public.”
The FBI is collaborating with the FTC and other agencies, FBI Cyber Division Deputy Assistant Director Tonya Ugoretz told the Aspen Institute Thursday in response to our question. The bureau's Criminal Investigative Division has close partnerships with agencies, including the FCC and the FDA, she said: They “have some of their personnel who are kind of on loan from one agency to the other to make sure” the information sharing is “appropriate.”
Ugoretz noted an uptick in complaints about cyberattacks to the FBI’s Crime Complaint Center, which typically fields about 1,000 complaints per day. IC3 daily volume has increased to 3,000-4,000. Not all the complaints are COVID-related, but a “good amount are,” she said. This includes everything from fraudulent internet domains and website spoofing to fraudulent charities.
Simons cited the agency’s FTC Act Section 5 authority to prevent deceptive and unfair acts or practices, in a March 17 letter to Rep. Bill Pascrell, D-N.J.
Sen. Ed Markey, D-Mass., wrote March 10, raising concerns about fake donation drives and price gouging. Simons responded March 24 citing the commission’s coordination with state attorneys general, who have specific price-gouging statutes. Commissioner Noah Phillips recently noted the FTC doesn’t have a price-gouging statute, though some state enforcers do (see 2004140064).