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Coronavirus ‘Snake Oil Salesmen’ Target of State Law Enforcers (1)

March 25, 2020, 9:30 AMUpdated: March 25, 2020, 4:30 PM

The new coronavirus pandemic has proven to be such fertile ground for scam artists that Michigan Attorney General Dana Nessel had to bring in an unconventional team to staff the state’s overwhelmed consumer complaint hotline.

Nessel enlisted state lawmakers this past weekend to field complaints about price gouging of disinfectants and other essential items, not to mention snake-oil cures and vaccines that don’t yet exist for Covid-19, the disease caused by the new coronavirus.

The deluge of calls, emails, Facebook messages, and letters hasn’t let up.

“You’re best able to take advantage of somebody in times when they’re scared,” Nessel said in a phone interview. “These scam artists are really going to town on folks as a result of the fear people are experiencing, the panic.”

Nessel’s office filed a cease and desist order March 23 against two Rockford, Mich.-based businesses that were marketing a Coronavirus Defender Patch.

The companies claimed on their website that the patch would “help aid the immune system to defend itself against exposure to the virus,” and “can help lessen the effect of the virus if you already have” it, for the price of $49.99, according to Nessel’s office.

In addition to fake cures and price gouging, the Federal Trade Commission and states have seen a spike in scams offering to help consumers get early access to government stimulus checks in exchange for access to bank accounts.

“This is a significant surge. It’s overwhelmed our office,” New York Attorney General Letitia James (D) told Bloomberg Law.

Price Spikes

Nessel said that Michigan had seen 1,578 price gouging complaints between March 16 and March 24. Typically, the state’s top law enforcement official would receive around 100 such reports in a normal seven-day span.

James said that her office has fielded around 2,000 calls from consumers since around March 10.

Most of those claims involve shocking price hikes on hand sanitizer, disinfectant wipes, and other vital supplies, with at least one instance of people charging $80 for a bottle of hand sanitizer, James said.

A bipartisan group of 32 state attorneys general on Wednesday sent letters to the chief executives of Amazon, Facebook, Walmart, eBay, Craigslist and Buckmaster urging them to take steps to prevent price gouging on items like hand sanitizer and face masks.

While state and federal law enforcement agencies are investigating and trying to stamp out price gouging, they also urge consumers to be vigilant, particularly when they shop online.

Colleen Tressler, a senior project manager at the FTC’s division of consumer and business education, urged consumers to stick with “vendors you know and trust.”

Targeting the Elderly

The scam concerns go beyond price gouging, however.

Some fraudsters are touting the ability to get federal stimulus checks early, even though Congress hasn’t yet agreed on payments to send out, said Arizona Attorney General Mark Brnovich (R).

Many of the scams target seniors, a particularly vulnerable population in the current outbreak, to get access to bank account and social security numbers, and other personal information, Brnovich said.

Brnovich said that he had been working with Sen. Kyrsten Sinema (D-Ariz.) “in a non-partisan way to really get the message out to seniors and try to work with her to address this problem in a holistic way here in Arizona.”

Bad Medicine

Fraudsters tend to use the fear of a viral outbreak to hawk miracle cures that are not miracles, vaccines that do not exist, and other fake treatments, Tressler said.

New York issued a cease and desist order against prominent right-wing television personalities like Wayne Allyn Root for hawking fake preventive measures and treatments on his NewsMax television show.

James issued similar orders against conspiracy theorist Alex Jones and televangelist Jim Bakker, among other orders. Having public figures like Jones and Bakker tout fake cures can make it easier for fraudsters to lure in frightened people, James said.

Brnovich said people need to be on the lookout for fake cures.

“There are people that are out there that are--it’s like the old snake oil salesmen--people that are promising treatments from everything from toothpaste to supplement to essential oils, all that crap. And that’s what it is, it’s crap,” he said.

(Updates in 12 paragraph with states urging online marketplaces to prevent price gouging )

To contact the reporter on this story: Evan Weinberger in New York at eweinberger@bloomberglaw.com

To contact the editor responsible for this story: Michael Ferullo at mferullo@bloomberglaw.com

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