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Risk Fraud & Compliance

COVID-19 and Financial Scams, Fraud and Misinformation: What You Need to Know

Thomson Reuters Institute  Insights, Thought Leadership & Engagement

· 5 minute read

Thomson Reuters Institute  Insights, Thought Leadership & Engagement

· 5 minute read

As governments across the globe try to respond to the ongoing COVID-19 pandemic, financial fraudsters are ramping up their own scams and schemes related to the outbreak.

Last week, the World Health Organization (WHO) labeled COVID-19 a “global pandemic.” The Trump administration declared a national emergency over the virus in the United States. And now international law enforcement and U.S. regulatory bodies have been making declarations of their own about cybercrime related to the outbreak.

Indeed, these financial fraud scams related to COVID-19 are spreading fast. The International Criminal Police Organisation (INTERPOL) released a statement about COVID-19 and financial crimes along with several important warnings by the House Financial Services Committee, the Securities and Exchange Comission (SEC), the Financial Industry Regulatory Authority (FINRA), AARP, and more.

The warnings from all agencies are clear: financial fraudsters are using the COVID-19 outbreak as an opportunity for scammers to send inaccurate information into the marketplace. Why? To capitalize on fears stemming from the pandemic and manipulate unsuspecting victims into parting with their money.

Investment and Product Scams

Investment scams, miracle cures, and fraudulent GoFundMe donation accounts have become widespread, and consumers should be on the look out for COVID-19 related investment scams and fraudulent product claims, says the U.S. federal government.

There are several categories of scams, including:

  • Phishing emails with malicious links claiming to be from the Centers for Disease Control and Prevention (CDC) or the WHO;
  • COVID-19 related investment scams, including so-called “pump-and-dump”schemes;
  • Miracle products claiming to prevent, detect, or cure COVID-19;
  • Online retail fraud and counterfeit goods related to the virus; andDonation or fundraising scams.

The Federal Trade Commission (FTC) and the Food and Drug Administration (FDA) issued a joint alert related to fraudulent products schemes designed to sell fake cures related to COVID-19. “These products are unapproved drugs that pose significant risks to patient health and violate federal law,” the FTC and FDA said in a press release.

Source: K2 Intelligence FIN

Outside the U.S., frightened consumers in the United Kingdom, for example, lost more than $1 million U.S. dollars to COVID-19 scams since February, with fraudsters claiming to have much-sought after protective masks. The criminals did not have masks, only false promises.

Attorneys General Issue Warnings

Attorneys General offices throughout the U.S. also have issued heightened alerts related to COVID-19 scams including pricing gouging, phishing email scams, and fraudulent products. The New York Attorney General Letitia James, for example, recently sent cease-and-desist orders to both radio talk show host Alex Jones and televangelist and convicted fraudster Jim Bakker, ordering them to halt any marketing or statements meant to mislead the public about products they were selling that they claimed would cure COVID-19. “There is currently no FDA-approved vaccine to prevent the disease or treatment to cure it,” AG James wrote. “And the WHO has also said that there is no specific medicine to prevent or treat this disease.”

The State of Missouri took the additional step of suing Bakker for a violation of state and federal advertising laws, demanding that he and his production company cease all advertising or selling of products as a treatment for COVID-19.

Other state officials similarly warned the public to exercise caution. “The public needs to think before they click on any unsolicited link or an email from any organization mentioning the coronavirus,” stated Arizona Attorney General Mark Brnovich. “If the public has questions about the coronavirus, they need to seek out that information on their own from reputable sources.”

Gabe Hidalgo, Managing Director at K2Intelligence FIN

Some Attorneys General are implementing emergency price gouging hotlines, such as Attorney General Ashley Moody did by activating Florida’s Price Gouging Hotline for all consumers in the state. Price gouging is happening on high-demand consumer products related to the pandemic, such as hand sanitizer, non-perishable foods, cleaning supplie,s and bottled or canned beverages, according to new research from Consumer Brands.

Communicate With Your Bank

How can consumers avoid falling prey to some of these nefarious crimes? Gabe Hidalgo, Managing Director at K2Intelligence FIN has some important tips.

First, never click on emails from sources unknown to you or that look off in some way, especially from financial institutions. “When it comes to scams, fraudsters are always looking for a way to get one step ahead, particularly in banking,” Hidalgo said. “Fraudsters play on people’s anxieties, and the uncertainty with COVID-19 is a breeding ground for the exact anxiety they are looking for.”

Hidalgo said he urges consumers to remain diligent with any communication to or from their banking institution. “Banks follow strict rules and protocols — such as not cold calling consumers to ask for personally identifying information — so people should keep this in mind,” he advises.

Most importantly, consumers should be aware of the channels which they use to communicate with their financial institution, Hidalgo explained, adding that consumers can find those official channels on the institution’s app, website, back of their debit or credit card, or official billing information.

For information on how to avoid COVID-19 related scams, please visit the FTC website for detailed information.

To keep up-dated on the latest news and information regarding the COVID-19 pandemic, the economic impact, and the government’s response, at Thomson Reuters’ COVID-19 Resource Center, and you can follow or the Reuters App.

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