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COVID-19 Scams and Fraud Keep Arizona AG's Office Busy

COVID-19 Scams and Fraud Keep Arizona AG's Office Busy
Defense.gov

There’s nothing like a global pandemic and historic unemployment for making a quick, dirty buck.

The Arizona Attorney General’s Office says it processed 280 customer complaints of fraud and a similar number of price-gouging reports during the COVID-19 lockdown.

“I expected a big wave of not only scams, but people damaged by those scams,” said Joe Sciarrotta, who leads the Consumer Fraud Unit at the AG’s office. “I directed everybody to prioritize COVID cases.”

Early in the crisis, his office started tracking reported virus-related rip-offs. It also began collating advisories from federal and other agencies and set up one of the first web pages in the country devoted to public advisories. It’s an extensive list and Sciarrotta’s team updates it every day.

Turns out, there are a lot of ways bad people can separate good people from their money in a crisis.

The top five reported to the AG’s office:

* Travel
* Payment issues, mostly involving recurring loans or fees
* Gym memberships
* Shipping delays
* Entertainment

State law prevents Sciarrotta from disclosing details of specific allegations. Nor could he say how many of the 280 cases he passed on to his Consumer Litigation Unit for civil enforcement or criminal prosecution.

Currently, the state has filed no legal charges in court stemming from COVID-related complaints, Arizona Attorney General’s Office spokeswoman Katie Connor said.

Some of the reported scams are variations on old themes, or just recycled capers. The COVID crisis makes people uniquely susceptible, even if they are usually vigilant about their cyber and financial security.

That’s because of mass confusion. With so many mixed messages about the virus, people don’t know which behavior is safe and which is not, how to get tests, what kind they need, which medicines or treatments are effective, or not, or just downright dangerous.

Millions of people filed for unemployment for the first time in their lives. Others sought government disaster loans or grants or waited on stimulus checks and tax relief. All mystifying stuff.

The volume of people seeking help overwhelmed public agencies. In March, the Arizona Department of Economic Security reported fielding 70 calls a second. Wait times were four hours, if a call was picked up at all.

Into this chaos steps the con artist.

I can get your loan approved, he says. Give me your social security number. For a small fee, I can get your stimulus check right away. Confused by the unemployment benefit application? Give me all your details and I’ll fill it out for you, free of charge. Your grandmother is in hospital but can’t make calls or see visitors? I can get her gifts if you send me some cash. Got a slight fever and a sore throat? I have the cure.

In that last case, Attorney General Mark Brnovich has sent three cease-and-desist letters to 21st-century snake oil merchants.

One was to the people behind the YiLo “Coronav Immunization Stabilizer Tincture,” available online for a 10% discount. A webpage advised people who had “come down with a life-threatening virus” to mix saltwater with dilute hydrochloric acid and drink it.

On April 3, Brnovich’s office wrote the company to warn its product was fraudulent, that it violated state law, and faced fines of up to $10,000 per violation. It gave the company one day to comply. The webpage is no longer up.

Three days later, the state put out a second such letter. This time it told Preppers Discounts Inc. to stop peddling “Instant Immunity Tablets,” and other questionable COVID-19 merchandise. The company was offering 10 free tablets to people who bought a two-pack of “(COVID-19) & Gas Masks N95, N100, P95, P100.” The company complied, but not without delivering, through New Times, a snarky message to the AG: "Kiss my ass."

And on June 26, the AG's Office sent a cease-and-desist letter to Dream City Church, warning it about fraudulent claims made regarding its air-purification system ahead of a Donald Trump rally earlier this week.

Sciarrotta said a warning letter usually suffices to solve the problem. Litigation is time-consuming and expensive.

Some cases aren’t as blatant and may not be fraudulent at all. During the lockdown, Brnovich’s office sent letters to three gym chains, demanding that they allow people to cancel their monthly memberships without penalty and not make customers come down and do it in person. Another letter went to Ticketmaster, urging it to refund tickets from canceled events. It did.

That seemed a common theme, said Sciarrotta.

His office fielded calls about AirBnB’s, travel agencies, and university travel-abroad organizers all refusing to refund money after the virus shut down travel. Similarly, sporting, concert, and other entertainment venues pocketed the money after their events were scrubbed.

Consumers also complained about shipping problems, packages arriving late, or not at all, with no recourse for reimbursement.

And then there was the more blatant, less understandable, and highly visible problem of price-gouging.

“Since Feb. 24, 2020, we’ve received more than 300 complaints regarding price–gouging. The biggest complaint category was food, with more than 70 complaints,” Connor said.

The top five targets of gouging were, predictably:

* Food
* Toilet paper
* Gasoline
* Protective masks
* Hand sanitizer

The AG's Office referred most of those complaints to federal regulators.

Arizona is one of 10 states that has no statute or any other way to criminalize price gouging.

The others are Alaska, Colorado, Montana, Nebraska, Nevada, North Dakota, Puerto Rico, South Dakota, Wyoming, according to FindLaw.com.

Brnovich, asked if he would recommend legislation based on his agency’s experiences with COVID-19 scams, told the Phoenix New Times in a prepared statement: “During difficult times like this, it brings out the best in people and also the worst in people. From fake COVID-19 cures to bogus sanitization services, con artists are trying everything they can to rip off consumers. Our team stands ready to fight back and take legal action against anyone who takes advantage of Arizonans.”

Still, there are some silver linings to all this larceny and villainy.

Much of it didn’t work.

“We have seen a lot of scams, but not a lot of traction, in terms of them working,” Sciarrotta said, suspecting people are wising up to the old tricks.

Key to that, he said, “Never give personal information or financial information to a call you think is unsolicited.”

It’s also possible they won’t notice right away, and the accounts will get drained later.

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The other upside? Remember all those annoying robocalls from “No Caller ID” or “Potential Spam” that pop up on your cellphone, usually during dinner? That guy who’s tried a dozen times to buy with cash a house from you that you don’t even own?

Well, it turns out a lot of that stopped during the shutdown, Sciarrotta said.

That, he said, is because, in some other parts of the world, con artists work on an industrial scale. When COVID-19 hit, they couldn’t keep their phishing fleece factories open. Con-artist call center workers didn’t want to get sick or their bosses just had to lay them off.

Maybe they'll find honest work during the recovery.

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