How to protect your business from common Covid-19 scams

Covid-19 has proved to be almost the perfect storm for criminals. It combines high demand and limited supply for certain products, plus fear, uncertainty and doubt around the virus. Prices and anxiety levels are rising, creating a market for counterfeiters, fraudsters and profiteers.

Self-isolation may make some scams less visible. Or displace them to an online setting as more people work remotely. Desperation may make people less circumspect about buying online or from unfamiliar sellers. These are ideal conditions for all types of purchase, pharmaceutical, financial and cyber-related scams.

US Federal Trade Commission data shows a jump in Coronavirus-related consumer complaints. The agency had received 7,800 complaints in the three months to 31 March 2020, double what they were a week before.

Purchase scams

Purchase scams are typically where the victim pays upfront for goods or services that never arrive, are not as described, unlicensed, counterfeit or sub-standard. For example, the European Anti-Fraud Office (OLAF) has noted an increase in the sale of fake masks, medical devices, disinfectants and sanitisers since the start of the Covid-19 pandemic. The intelligence-sharing page at the Cyber Threat Coalition also lists websites with Covid-related scams.

Pharmaceutical scams

Merchants must not dispense or offer to dispense medicines that are not licensed for sale. A medicine may be licensed for sale in one country but not in another. The internet facilitates cross-border sales, yet transactions must be legal in both the country of the buyer and seller, according to card scheme rules.

The UK Medicines and Healthcare Products Regulatory Agency (MHRA) said it was working urgently to investigate a large number of potential scams, including the marketing of self-testing kits for home use, and by early April 2020 had already taken down several fraudulent websites.

For the avoidance of doubt, there is currently no known cure for Covid-19. Anti-malaria drug chloroquine has been touted as a possible cure, including by US President Trump. However, when a medicine is licensed, it is for a particular indication, at a particular dosage, route of administration and so on. A medicine may be licensed for the treatment of malaria, but merchants cannot legally sell or dispense it to treat other illnesses.

How goods are sold is as important as what goods are sold. If a merchant uses deceptive sales and marketing practices, which violate consumer protection laws or trading standards legislation, transactions for legal goods may become illegal. Regulators have been vigilant in taking unscrupulous merchants to task.

In early March 2020, the US Federal Trade Commission (FTC) and Food and Drug Administration (FDA) sent warning letters to seven companies allegedly selling unapproved products. These made deceptive or scientifically unsupported claims about the ability of products containing essential oils and colloidal silver to treat or prevent Coronavirus.

Financial scams

Governments worldwide have announced financial support packages for individuals and businesses due to Covid-19. Unscrupulous criminals are exploiting this to set up advance fee frauds.

They convince their victim to pay a fee to release a government refund, rebate or disbursement. Or they exploit people’s financial vulnerability with offers for payday loans or debt consolidation. Payments are requested via plausible means, such as Mastercard, Visa or bank transfer but then the promised funds never materialise.

Cyber-related scams

The rise in remote working means a rise in computer tech support, software and fake anti-virus scams. Phishing and malware scams have been updated with Corona-themed e-mails purporting to be from official sources, such as the Centre for Disease Control and Prevention or World Health Organisation. Victims are asked to click on links, download malicious attachments or divulge login details. This could lead to theft of personal information, login credentials or banking details.

How Web Shield can help

Any merchant scamming their customers is also scamming their acquirer. It pays to underwrite wisely and remain vigilant at both the merchant on-boarding and monitoring stage. Web Shield has also added functionality in both InvestiGate and Monitor to assist customers in identifying possible hidden high-risk merchants.

Deceptive marketing practices are the subject of the fifth book in the Web Shield ‘Fundamentals of Card-Not-Present Merchant Acceptance’ series available to order here. The topic will also be the first in a series of online courses developed for the Web Shield Academy.