Federal Trade Commission official describes COVID-19 fraud as 'unprecedented'

An official with a government agency responsible for cracking down on deceptive and unfair trade practices described as “unprecedented” the scope of the fraud involving COVID-19.

“I’ve been through other national healthcare scams, and I’ve never seen before the scope of companies out there marketing products without good science for treatment or prevention of whatever the health problem is,” said Richard Cleland, an FTC official, in a phone interview.

On Aug. 14, the commission announced warning 20 marketers nationwide in letters to stop making unsupported claims that their products and therapies can prevent or treat COVID-19. The agency previously sent similar letters to nearly 300 other sellers and marketers.

In other health crises, the commission targeted unsubstantiated claims that products like dietary supplements could treat maladies such as Ebola and SARS (severe acute respiratory syndrome).

“Those [cases] really only involved a fraction of the warning letters that we’ve sent out relating to COVID-19,” said Cleland, assistant director of the Division of Advertising Practices, Bureau of Consumer Protection.

Since March, FDA and FTC officials have sent numerous joint warning letters to companies for making unsupported claims that products can treat or prevent COVID-19.

Cleland articulated FTC’s concerns: “That consumers would use these products or may use these products, and as a result, if they don’t work, of course, they lose their money; but even beyond that and more importantly, it may give them a false sense of security, so that they don’t feel as constrained about following the health service advice about wearing masks and social distancing and washing their hands.”

High compliance rate

Of the warning letters sent to marketers related to COVID-19, Cleland estimated his employer has achieved a compliance rate exceeding 95%.

“Sometimes, the firms don’t get it exactly right the first time, and we have continued to work with them,” he said. “But overall, we’re extremely pleased with the level of compliance that we’ve received.”

Most of the companies targeted by FTC removed any references in their advertising to COVID-19 or similar language like the “current pandemic,” while a few firms have stopped marketing their products, Cleland said.

“If a company actually refuses to comply with the request, the next step is the evaluation of that for a law enforcement action,” he explained.

Enforcement actions

Through administrative or court actions, FTC officials have brought cases against marketers for making unsubstantiated health claims related to COVID-19. On July 31, for example, the agency filed a complaint against two corporations based in Porterville, California, and their executives over alleged “bogus treatments for serious medical conditions.” The defendants promoted and sold products through "plans of care" ranging in price from $23,000 to $200,000, which falsely claim to treat or cure COVID-19 and other diseases, including cancer and Parkinson's disease, the complaint alleged.

FDA also has aggressively targeted COVID-19 health claims. It has issued 106 warning letters to firms for selling fraudulent products with claims to cure, diagnose, mitigate, prevent or treat COVID-19. In addition, FDA has sent seven warning letters to online pharmacies related to the pandemic, an agency spokesman said.

FDA also has taken some civil and criminal actions against individuals and firms related to COVID-19. In August, for instance, a Georgia man and his company were criminally charged with violating the Federal Food, Drug and Cosmetic Act (FD&C) by selling a drug claiming to treat COVID-19.

Decrease in ‘bogus claims’

Asked if the pace of fraud is slowing down in the marketplace based on FTC’s investigations, Cleland responded, “We’re seeing some slowdown.”

“Early on, we were receiving lots of complaints, which we reviewed every day, and the number of complaints that we have received about bogus claims has recently decreased,” he said.

During the pandemic, consumers have shown a keen interest in products that promote the immune system, such as dietary supplements.

“Unfortunately, there is no reliable evidence that taking steps now to improve the immune system is going to have any effect on either contracting COVID or reducing the seriousness of the illness if you do contract it,” Cleland cautioned.

By and large, the dietary supplement industry has been supportive of the government’s actions. Megan Olsen, vice president and assistant general counsel of the Council for Responsible Nutrition (CRN), applauded actions by state and federal regulators “to protect consumers from fraudulent claims.”

“We haven’t seen anything from either FDA or FTC that we believe strongly oversteps their authority to challenge these claims,” she said in an interview.