Should the Federal Trade Commission Lead Federal Agencies in Protecting Consumers Against COVID-19 Scams? (H.R. 6435)

What is H.R. 6435?

(Updated March 2, 2021)

This bill — known as the Combating Pandemic Scams Act of 2020 — would require the Federal Trade Commission (FTC), in consultation with the relevant agencies, to inform the public about mail, telemarketing, and internet scams related to COVID-19. It would also require the FTC to establish a national database for information about COVID-19 scams and to disseminate information about how to report COVID-19 scams to the appropriate agency.

Relevant agencies that the FTC would work with include the Food and Drug Administration (FDA), Dept. of Health and Human Services (HHS), United States Postal Service (USPS) and the Interstate Commerce Commission (ICC).

Argument in favor

COVID-19 scams and frauds are a major problem: since the beginning of the pandemic, the Federal Trade Commission (FTC) has received nearly 250,000 reports of fraud. Consumers have lost over $182 million to COVID-19 scams and frauds, with a median fraud loss of $320. Clearly, there is a need for federal agencies, led by the FTC, to take a more proactive role in protecting consumers from COVID-19 scams and frauds.

Argument opposed

The FTC and Health and Human Services (HHS) websites already provide information to help consumers avoid COVID-19 scams, including dashboards detailing COVID-19 scam complaints by state and type. There is no need to put additional strain on the FTC and other federal agencies — which are already under strain due to the ongoing pandemic — by requiring them to do additional work to educate consumers about COVID-19 scams.

Impact

COVID-19 scams; Federal Trade Commission (FTC); Food and Drug Administration (FDA); Dept. of Health and Human Services (HHS); United States Postal Service (USPS); and the Interstate Commerce Commission (ICCC).

Cost of H.R. 6435

A Congressional Budget Office (CBO) cost estimate is unavailable.

Additional Info

In-Depth: Sponsoring Rep. Buddy Carter (R-GA) introduced this bill to prevent scams during the COVID-19 pandemic:

“As the nation grapples with the COVID-19 response, bad actors are taking advantage of the pandemic by scamming or price gouging innocent Americans. According to the Federal Trade Commission, there have been nearly 8,500 reports of fraud or scams during the public health crisis. As businesses struggle, hardworking Americans lose their paychecks and Americans worry about the health of their families, it is abhorrent that scammers are preying on this vulnerable situation. It is also illegal. As federal agencies go after these criminals, I introduced this legislation today because it's necessary that the public is informed of the scams and price gouging so they can be avoided. The more Americans know about the scams, the easier it will be to protect themselves."

Original cosponsor Rep. Annie Kuster (D-NH) says:

“We are living in a time of stress and uncertainty, and as we combat the spread of COVID-19 in New Hampshire and across the U.S., we must also combat the spread of misinformation and scams. Unfortunately, some have seen this public health and economic crisis as an opportunity to take advantage of Americans – especially the most vulnerable among us. By providing critical information and resources to avoid COVID-19 scams, we can keep consumers safe and prevent bad actors from taking advantage of Americans during this national emergency.”

Original Republican cosponsor Rep. Richard Hudson (R-NC) adds:

“As the coronavirus pandemic continues to develop, unfortunately bad actors have tried to use this public health crisis to prey on people through scams and price gouging. The Combating Pandemic Scams Act will ensure the public is aware of scams to better protect themselves and their loved ones.”

This bill passed the Committee on Energy and Commerce by voice vote with the support of five bipartisan cosponsors, including three Democrats and two Republicans.

Of Note: As of November 16, 2020, the Federal Trade Commission (FTC) reported 249,219 reports of COVID-19 frauds and scams. In the 48.9% of fraud reports in which a loss was reported, the median fraud loss was $320. In total, consumers reported $182.95 million in total losses. Consumers in all fifty states and Puerto Rico reported COVID-19 frauds and scams.

By volume, online shopping — mostly with regard to people ordering products that never arrive — is the top complaint category with 35,166 reports totaling $25.17 million in cumulative value. Vacation and travel complaints, mostly relating to refunds and cancellations, are second by volume, with 28,715 complaints. However, the total value of these complaints far exceeds that of online shopping complaints, clocking in at $53.19 million.

Media:

• Sponsoring Rep. Buddy Carter (R-GA) Press Release
  
• FTC COVID-19 and Stimulus Reports Dashboard
• FTC - Coronavirus Advice for Consumers
• HHS OIG - COVID-19 Fraud Advice