As Coronavirus Spreads, So Do Scams
COVID-19's spread has shut down businesses, seen unemployment rates skyrocket and upended individuals' lives and shaken social norms. It's also emboldened some business owners and individuals to scam the public.
During disasters and emergencies, a business selling items at an exorbitant price, or price gouging, is the most common scam, according to Attorney General Ken Paxton’s Consumer Protection Division.
Under The Texas Deceptive Trade Practices Consumer Protection Act, anyone found guilty of selling necessary items at an excessive price when a disaster strikes is required to refund consumers and may be held liable for up to $10,000 per violation. Violators are also on the hook for an additional $250,000 if the victims are elderly.
As of late last week, Paxton's office has received and processed 10,072 complaints regarding COVID-19, 8,586 of which allege price gouging. Complaints, noted AG spokesperson Kayleigh Date, do not mean all allegations are true.
Paxton's office has filed lawsuits against two companies alleging price gouging.
"Common items complained about include toilet paper, bottled water and hand sanitizer, and the two regions with the majority of complaints are Houston and Dallas," Date said via e-mail.
In March, Paxton filed suit against Auctions Unlimited after listing an auction on its website for more than 750,000 face masks — that listing included face masks, N95 particulate respirators, hand soap, all-purpose cleaner and disinfectant wipes.
Owner Tim Worstell admitted to receiving warnings from law enforcement but continued forward, listing N95 respirator masks as high as $180 for a package of 16 masks — more than double the average retail price.
Last month, Cal-Maine Foods, Inc., the dominant egg supplier in Texas, was sued for increasing the price of eggs by 300%.
During previous disasters, such as Hurricane Harvey in 2017, multiple gas stations were fined for raising prices at the pump.
Public health crises provide another scam opportunity: products fraudulently claiming a cure. According to the Centers for Disease Control, "there are no drugs or other therapeutics approved by the U.S. Food and Drug Administration to prevent or treat COVID-19."
Yet the fear of catching the disease hasn't stopped scammers from promoting so-called cures. The Food and Drug Administration has sent more than 50 warning letters to companies making unsubstantiated claims surrounding cures or treatments for COVID-19.
Bay Scoggin, state director of TexPIRG, a consumer and public interest advocacy group, recommends avoiding products claiming they boost the immune system or have antiviral qualities. Also look out for labeling that contains spelling errors, has inconsistent capitalization or uses inflammatory, fearmongering rhetoric.
In March, Paxton warned of scammers impersonating officials with government agencies, which often prey on the elderly or poor.
"There are variations of this scam, such as local law enforcement contacting you with a warrant, agencies asking for donations, back taxes or fines, or asking for your personal information to either confirm innocence or receive a payment," Paxton warned in a statement. "Government agencies do not email or call individuals with financial solicitations."
Nor do banks. "The easiest way to become a victim of a bank scam is to share your banking info — e.g., account numbers, PIN codes, social security number — with someone you don't know well and trust. If someone asks for sensitive banking details, proceed with caution," Date said in an e-mail.
Scammers are creative when it comes to getting financial info. One deceptive practice is especially relevant right now: scam job listings advertising a legitimate, work-at-home job. But in exchange for a commission, the potential employee is asked to transfer funds in and out of a bank account. These sorts of job listings are a creative way to access and wipe out financial accounts.
Scoggin said even amidst the stress caused by the pandemic, consumers need to remain aware of too-good-to-be-true opportunities.
"Scammers know that we are most vulnerable during uncertain and fearful times, like the current pandemic," he said. "We've seen significant focus from fraudulent sources put on our most important needs: fake cures, fake tests, unemployment fraud, and Social Security phishing. Consumers need to know that if they have any doubts whatsoever about a call, email, or text, they should ignore it and check the most authoritative source: usually a government website."
You can learn more about the consumer complaint process through the Attorney General's Office.
TexPIRG also has a number of videos about how to avoid scams.
James Russell is a Fort Worth-based freelance writer. You can follow him on Twitter @jamesfortexas.
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