Transcripts For CSPAN2 Senate Hearing On COVID-19 Scams 20240712

Good afternoon. All here today to a hearing entitled acting americans from covid19 scams protecting americans from covid19 scams. The nation continues to fight the Health Crisis brought on by the covid19 pandemic. In addition to the threat this pandemic poses to americans, the Economic Impact resulting from responsible Public Health protocols have been felt in every corner of the country. It has become clear that preventing practices and dedicated resources including expanding testing capability and the availability of personal protective equipment are absolute necessities to a responsible path forward in extinguishing this Health Crisis. However, during this time of National Emergency and coordinated recovery, there are scam artists that seek to take advantage of consumers, especially the nations most vulnerable communities, like that of our nations seniors. Networks Consumer Reports consumers across the u. S. Reported over 136,000 Different Cases of covid related scams totaling approximately 90 million in fraud losses from january 1 to july 20, 2020. More specifically, at home in kansas, over the same time, consumers report over 500 related cases totaling over 800,000 in financial losses. Everyone should also bear in mind that these are only the reported cases. It is fair to assume there are unable of harmful consumer scams that have been not that have not been reported to date. These innovative scams remain difficult for any consumer to wrap their head around, much less defend against. Whether it be Unsubstantiated Health benefits advertised for certain products, robo calls, fraudulent donations or imposters claiming to be from federal agencies collecting mandatory payments, raising awareness to these practices is critical to protecting consumers. As such, this subcommittee has much to learn from industry and Consumer Protection experts in their efforts to not only identify and address these harms, but also what they are doing to prevent these harms from occurring in the first place. If there is a role for congress to play in supporting these efforts, those suggestions we will need today and in the future. More specifically i look forward to hearing from the ftc on how there you how their authorities are used in addressing covid related scams stemming from abroad and how enactment of the safe web extension act is critical for these lawenforcement efforts. Additionally, i would be interested to hear from the witnesses about any specific efforts directed to particularly vulnerable groups like seniors. Senator klobuchar joined me in the protecting seniors from emergency scam act, which requires the ftc to report on scams targeting seniors and appropriately to distribute such information to seniors and their caregivers. The subcommittee looks forward to hearing more about current enforcement efforts to detect, identify and prosecute criminal organizations involved in these illegal activities. If there are ways congers can strengthen the current framework of the task forces to address the crimes, this subcommittee would again welcome the suggestions. Todays panel provides a variety of different perspectives on the same important issue. Joining the subcommittee is the attorney general of the state of kansas. Ftcsith, director of the bureau of Consumer Protection. Knowb4der and ceo of inc. While the food and Drug Administration was not able to join us today, the agency has been active in protecting consumers around this pandemic and provided written testimony ed to respond to questions for the record from the Committee Members as well. Finally, u. S. Telecom provided a letter for the record describing the collaborative efforts of companies in the trace back group to actively trace and identify sources of robo calls that only increased in frequency during the pandemic. I ask that this letter be submitted for the record. Without objection it is. With that, i turned to senator blumenthal for his Opening Statement. Sen. Blumenthal thank you for having this hearing. In the wake of almost every disaster in this country, no matter how dire, there are always bottom feeders and con artists who exploit peoples fears and hopes. We all know, probably everybody watching and listening today knows there is no cure for covid19 and there is no vaccine or other medical prevention. That has not stopped the con artists and scams from exploiting peoples fears and hopes. In fact, they have defied both science and common decency in taking advantage of people financially. So, the scams range from the invasion of privacy and products that are useless, price gouging, mortgage and Student Loan Relief scams, false cures and fake tests, cons, but more than just financial loss, people face Real Health Care danger. False cures can kill. False cure not only take peoples money, they can kill, and deception can be deadly. So, there are a variety of products, and in fact, the ftc has issued 255 warning letters. Those 255 companies were defrauding and endangering consumers before they were caught. Those 255 companies are among hundreds of others that are still doing business. Those 255 companies have paid no cost, none, for breaking the law and harming people, despite the ftcs warning letters, and they are still doing business. They may have changed their marketing pitches to be slightly less deceptive and misleading, but they are still out there. And if warning letters will not protect consumers, we need stronger action. On march 9th, i wrote to the ftc and fda, calling on both agencies to take more aggressive action to stop the marketing and sale of fake coronavirus cures, warning letters to marketers, they simply fail to give co they failed to inform. Correct wrong information and they sent no real signal to the market. There need to be real determined just justence, not warning letters for or a slap on the wrist. Last monday i wrote the ftc and fda on the dozens of unsafe supplements being sold on amazon and other Online Marketplaces that claimed to kill viruses. Amazon still has supplements, thecs, probiotics, in search for the covid here. We need to stop the snake oil salesman. I mentioned a number of them in my march 9th letter. In particular, tv evangelist jim baker, who recently promoted a celluloid silver on his show, claiming that it would eliminate viruses such as coronavirus. Another one, cellular silver itself claims to quote, achieve complete kyl against 6 kill against 660 microorganisms. This is deception. We find these kinds of utterly fors as f false ads amy erapy, herbal there is a list, and it is growing. Hope that i think this crisis would pass swiftly and that we could return to a normal life, both the Health Care Crisis and the economic crisis. We are six months into this pandemic. There is no end in sight to this horrendous national suffering we national suffering. We have seen hardship and heartbreak. It has been aggravated, not reduced, by many of these false and misleading promises for products that threaten health care, endanger lives, take money from people unfairly and illegally, but also pose grave dangerous to Public Health, and if we can do something about them, mr. Chairman, we will accomplish a lot of good for the american people. Thank you. Senator blumenthal, thank you. We now will hear testimony from our witnesses and we will begin with the honorable derek schmidt, attorney general, state of kansas. Thank you, mr. Chairman. Chairman moran, thank you for the invitation and thank you for accommodating our remote testimony today. I will admit it is the first time ive presented congressional testimony without leaving the office of the attorney general, so i hope it lives up to your needs. Mr. Chairman, both you and the Ranking Member have laid out very well the framework in which we operate is a state level enforcement agency. You have my written testimony. I wont read it. I thought i would use my minutes for oral presentation to emphasize the highlights that we have already presented to you in writing. Let me first discuss one case, for the purpose of illustrating, not because that case is necessarily all that extraordinary, but it illustrates some of the types of Enforcement Actions at the state level that we are engaged in. I had already filed a lawsuit prior to the covid pandemic against a defendant. Both civil and criminal litigation against i haveng against him, so to say the criminal charges are only accusations and that it is presumed innocent unless proven guilty, but on the civil side, we accused him of violating our states consumer laws by selling autopsy services, Tissue Recovery Services and other related types of Services Without having the qualifications to do so. Oined from enj operating with the state of kansas from Court Ordered during our litigation and then along came covid and we received information after the pandemic erupted in the public consciousness that our enjoined defendant had set up some new companies and was peddling essentially the same services, although in a new package outside of kansas, beyond where he was enjoined, and specifically he marketing his unqualified services to families and individuals who had loved ones that were deceased as a result of covid to do autopsy and tissue recoveries, which in my view, he is entirely unqualified. Because we have a case already request for Additional Information did not take long. We were able to go back in front of our judge and receive an expanded temporary restraining order that prevents him from representing himself on any of this, including on the covid related services, and also bars him from leaving the state of kansas without case by case permission from our court. Tose this case just illustrate, you know, we often talk at the broad policy level about sort of the collective impact of cases and behaviors by groups of defendants, groups of companies, whatever it may be, and those are certainly important, but at the end of the day, Enforcement Actions, at least at the state level, typically boiled down to one defendant or associated group, one group of misconduct. So those are the types of cases we wind up dealing with with some regularity. Moving beyond that individual case, let me just mention some of the types of complaints, of scams and related misconduct we have been receiving since the pandemic erupted on this stage in march. We have investigations pending with respect to each of these categories. I wont be able to discuss the particular investigations, but i can talk about the general approach and subject matter. As you and the Ranking Member already pointed out, the crooks and scam artists use the same tools they always use, trying to get into peoples pocketbooks. They just changed the messaging to reflect the current concerns about covid and to prey upon what people are currently worried about. We saw, for example, the first wave related to Contact Tracing, something that back in march most americans had never heard of. And the Text Messages would claim along the lines that this is an official communication letting you know you have been in contact with the person who has tested positive for covid19, please click on this link in order to get more Public Health information to help you know what you need to do next. Of course it was a phising em phishing email. It had nothing to do with any legitimate Public Health purpose. We put out an early consumer alert in our state on that to raise awareness and try to help people avoid the problem, because it is obviously much easier to prevent people from becoming a victim than it is to chase down their money when these scammers operate from offshore. Another type of scam that we have seen a lot of complaints on, as already mentioned by senator blumenthal, are covid prevention and treatment scams. It is everything you have read about, and they come in and all the usual way, sometimes by robocall, and sometimes by personal call, sometimes by text message, sometimes by email. Ms, plans to ppe sca sell ppe to folks and then either there was none or it existed but was subpar or it existed and it was good, but it was stolen and it was not there it was not theirs to sell. We have seen all of the above. We have seen scamselated to stimulus checks, communications saying, folks, we are from the Small Business administration, we are from the irs, we are from fill in the blank Government Agency and we are here to assist you and making sure you get the payment to which you are entitled, and we have seen fraudulent unemployment claims, usually the objective there is to get personal information and a payment based on some type of identity theft. Ourlly, mr. Chairman, from standpoint, the ability to cooperate with federal agencies is critical. The vast majority of law isorcement on these scams conducted in the state and local level, but we are geographically and jurisdictionally limited. And it makes no sense for us to be doing things and our territory and the federal agencies to be doing their thing in the territory that is kansas and us not to be coordinating we coordinate. We have a very good working relationship with principal agencies you would expect for this type of work, whether it is hhs, oig or the fbi, secret service, among others and we have readable those efforts during covid. Two things i might suggest for consideration on a policy standpoint related to that. One is i do think there is room i suggested this to you before covid, and i think covid has proven the point room foa more structured relationship between statelevel enforcers and our regional, federal law westman partners. Federal agencies receive a lot of information. A lot of complaints come from citizens. Limited, in terms of size. Make choices and look at their choices. Whenimes, it is help for our federal partners receive a complaint, they have worked it up in part because they are trying to figure out what they have. It is very helpful, if they present it to us. We can prosecute those cases. It makes us very happy because it gives us more cases in the pipeline. The second and final thing i would suggest for consideration, there is one thing pending in the senate that would be very helpful in advancing our capacity on some of this. Senate bill 79. I know you are a sponsor. It is a measure that has been pending for years now. It would remove what i think is an arbitrary area in federal law that prohibits states from using the control units to detect or prosecute patient abuse, as opposed to systemic fraud. Unless that abuse occurs at an institutional setting. Is, somebody who is ripping off and defrauding in ealth care setting, trying i am not allowed to use the assets, which are partially funded and subject to limitation, to investigate and prosecute that. I have to find out how to do that with other resources. Helpful if that limitation relifted swiftly because it would allow us to deploy already existing and inplace prosecution resources to address noninstitutional covid scams. Thank you for the opportunity to present the information. Thank you for your help in protecting consumers. Thank you for your specific suggestions about actions. Mr. Andrewtness is smith. Thank you. I am andrew smith, director of the federal trade commissions bureau. My written statement represents the views. Of theessarily the views commission or individual commissioners. I am pleased to appear before you today to discuss protecting americans from covid19 scams. Theite the disruption, bureau has managed to be productive, particularly with taking to scams advantage of covid19 fear and confusion. Many are outlined in my written testimony, but what is truly remarkable is how the entire bureau has visited to the occasion and made a major contribution against covid scams. Each of our regional offices is pulling its weight, while keeping up with project loads and cases. Practice division is taking on robo calls. Our Privacy Division is focused on Contact Tracing and issues around since learning. Our Enforcement Division is taking on fulfillment scams that promise ppe to consumers, but that never delivered. Collecting and analyzing complaint data for public consumption and improve Law Enforcement targeting. It remote courtroom appearance these, testimony and production. Until graphic shareable videos and other material in five different languages. It has also been conducting extensive outreach directly and through our partners in the advocacy organizations and trade groups. Our regional offices are doing all of the above, actively engaged in investigation, litigation and tros. The car on the way up here, i got email about a joint a that our Chicago Office had done with the Missouri Attorney general, a warning letter to two separate companies, warning them against making fake claims. That was within the last hour that we did that. None of the work we are doing the be possible without the coordination with federal, state and local partners. Sentng with fda, we letters to sellers. We have been working to halt illegal robo colors. We have taken action against Companies Offering financing without fda approval. Ine actions have been conjunction with other criminal authorities executing search warrants. State regulators are joining us or taking action against recipients of our ftc morning letters. They have worked with us on investigations and enforcement. Mentioned u. S. Telecom trace back initiative, which has been invaluable to leading us to the source. Our partnership has enabled us to reach literally millions of consumers with our message. One aarp presentation early in the pandemic was viewed by more than 850,000 people. New ideasays open to about how to better educate and protect consumers from ,ernicious covid related scams and i look forward to our conversation on this topic. Thank you for the opportunity to testify. Thank you. The founder and chief executive officer. Members of the committee, asnk you for the opportunity we work towards developing solutions combating covid scams. Sherman. S stu we are headquartered in florida with offices in europe, south america, australia and southeast asia. Our services are used by more organizations with 24 million employees around the globe. The last 30 years, i have served as an entrepreneur in industry. I founded an antimalware that got multiple awards and was acquired in 2010. As i was running the company, i realized the Human Element of security was being seriously neglected. I decided to help organizations to manage the ongoing problem of cybercrimes. I want to provide Security Awareness training. A variety of industries, including highly regulated field. Mobilized their users as their last line of defense. Objective, also our consumers to make smarter security decisions by training them to become a human firewall and defense against social engineering. The shutdown has expended the cyberattack surface, making it even easier for a hacker and scammer to do their nefarious acts. That do not focus on element, we ignore a crucial part of cybersecurity. Beginning of this year, covid19 has quickly we shaped the cyber threat landscape. Coronavirus related phishing attacks have occurred per week, over the last month. No one is immune to being scammed. Ofy target different sets consumers. Scams go to Great Lengths to make their attac possible. There few visible sites. Frequent social engineering testing. Here is one example. Vendor. From a security a shift to Remote Working has changed the face of cybersecurity for current and future work climate. 94 of organizations are more cybersecurityt than before covid19. People are clicking at high rates. On it has been on hardware and software. We cannot solely rely on that. This strategy cannot catch everything. Fordoes it address the need a human firewall. Any support from congress that would direct agencies to implement ongoing security registering, more than just training and include testing would be greatly beneficial, as we Work Together to bridge the gap in cybersecurity and protect american networks. Tonk you for the opportunityc share perspective on cybersecurity and our industrys unique ability to protect citizens from rising covid19 engineering scams. Thank you for the time and effort you are putting into this important matter of Social Security. We will all work to serve the best interest of the public. Thank you. Thank you very much. Dirtor and the public interest, welcome. For the you chairman honor of testifying today on this critical topic. I am the policy director, a 50yearold organization. Facing anare unprecedented challenge in keeping themselves and their families safe during a pandemic. Public Health Officials emphasize that we need to ially distance and walked wash our hands. We are looking for more to protect themselves. Those without scruples are actively exploiting consumer fear and anxiety. Market weulated have been collecting evidence of it to thesending federal trade commission. It includes many misleading claims for those suffering from addiction, asacco well as those making false claims on female fertility. When the coronavirus appeared, we knew the hucksters would not be far behind. First, we vote about televangelist jim baker, whom we heard the senator described. Advancing the claim that products containing Colloidal Silver could cure coronavirus. Ity had previously claimed cured allere is no evidence thar supplements heal or treat any symptoms. Colloidal server, in large amounts, can be dangerous to kidneys and major organs. It can cause permanent discoloration of a persons skin or major organs. Sent a request asking for enforcement on supplements being marketed as antiviral claims. Only drugs can cure or treat disease. Found 46 Dietary Supplements making illegal claims. Than for immediate removal. 26 of these supplements are still making antiviral claims on their own websites or on online stores. We continued to be on the look to the claims. Ed in the pandemic, such untruth posed a clear and urgent danger. Consumers may fail to practice social distancing, endangering themselves and everyone around them. They may harm themselves i taking dangerous doses or failing to seek appropriate treatment. It is worse than that. Any recent episode, he advises consumers to take the immunity supplements he sells and to covid19ely contract because his supplements will reduce the symptoms. Tary supplements established a barebones system of oversight designed to be week. Given the tremendous expansion of products and use by consumers the system is failing. The fda and ftc need more funding and personnel for reinforcement. Toolsa needs far better to make the marketplace transparent for regulators and consumers. Shouldtion, congress authorize the attorney general to improve accountability and reach. Fda should be given heightened regulatory powers because they are marketed to vulnerable groups. We would appreciate the opportunity to work on oversight to ensure that they are protected from fraud. It should not take a pandemic to require supplements like any product are truthfullyn enabled and marketed. You and i am happy to answer any questions. Thank you very much for your presence and testimony. On april 14, the senator and i sent a letter asking if the ftc had the authority under its flexible authority to enforce against unfair, deceptive act. Issue of pricee gouging. Respondedthe chairman saying there are legal challenges to address price , and they rely heavily on the doj and state attorney generals to enforce such activity. Historically, the ftc has not authorityon five related to those acts or practices related related to price gouging. Would you have recommendations for this subcommittee as to what that should look like . You are right. Shocksave been supply following natural disasters and the like. Could the Unfairness Authority for the increased prices that follow the supply shocks . They have been reluctant to use authority in that way. States haveother the authority as well. They have seen fit to enact price gouging. Schmidt. Udes general his remarks talked about that. That a special law would be helpful here. We have worked with some of your offices on this. What we would recommend is the crisis to which the statute applies should be clearly defined and be national in scope. There would be a narrowly defined or clearly defined National Crisis that st. It would be nice if it defines the type of materials or services that would be covered. There should be a clearly defined trigger like an increase in price over a precrisis index. What some account for. There should be some acknowledgment that increased cost might be legitimate. If a merchant needs to find alternative supplies, we do not want to discourage that. Want to we do not discourage people from providing critical goods and services. Items. Re three or four paternal turn to the attorney general. We do have a law in place. Tell me, would you describe your efforts in enforcing law . Do, after the 9 11 attacks , the state of kansas enacted our profiteering from disaster statute. Is structured, it is in effect only in the time and red state of emergency by the governor or the president. Those are the two triggers. The standard is any unjustified increase of pricing, as compared with a particular price or product. That there is a presumption that something was unjustified, although if it is a passthrough cost, it negates the presumption and operates as a defense. It applies to what the statute calls necessary goods or services, essentially things that consumers are likely to need more of. That is the structure of our statute. For efforts to enforce it, it has been in effect in a more widespread way than ever before. We have approached this. We have investigated them all. We are investigating them all. Throughapproached this engagement with the supplier and retailer. They did not know that it existed because it is so rarely in effect. Other times they are just passing through costs so we can go up the supply chain. We have tried to approach it. We have not actually had to file an westman action. We have had a number of suppliers change their behavior. Stateow turn to a former attorney general. Attorney general smith, thank you for the good work you are doing ethic. He provided evidence as to one of the recommendation made about authority on the part of state attorneys general to enforce federal laws. May, mr. Smith, what do you think about getting state attorneys general Broader Authority . Speakinglly i am for myself, not for the commission. A lot of the Consumer Protection laws that we currently enforce have authority to enforce them as well. I think that is terrific and it is a big help for us. If they are willing to share some of the load, with respect to enforcement, we are delighted for that. Isould say that when there the federal trade commission or whoever the authority maybe has the opportunity to receive notice of the case before being with those safeguards, traditionally, we have been in favor of the federal statute. I want to thank you for the work that your organization does. You do magnificent research and policy formulation. Not only is there a financial cost, but they have adverse side effects. The sense of false security may the kinds of dangers that they pose, when people talk about them and exaggerate them to their friends or neighbors. Is a special responsibility on the part of everyone involved in promoting these products, and i know in your testimony that you make an reference to amazon, ebay and etsy. ;lets do a far better job of removing misleading claims and products. Shouldnt they be held accountable . Yes. I think there has been a perception that the thirdparty platforms are just a marketplace without a stake in the game. Increasingly, we see that is not the right understanding of the model. They profit from having all the sellers on their platform. Learned tremendous amounts about the marketplace and behavior of buyers and sellers. They sell them directly. Patrolould be asked to the viability of claims that they are managing. That weviral complaints have filed have been very disappointing to see. They are doing some coordination from news reports with the department of homeland security, around covid products what we would like to do is see more of that shared enforcement model. Amazon has been found liable in court for selling food that should have been recalled after they were identified by the cdc as having a foodborne pathogen. In addition we were working with the family that left their son is unwashed poppyseed, which an opiate, that was sold through amazon in bulk amounts for this purpose. It was clear from the comments these were used for drug purposes. Those are the kinds of things we see. We think there could be a much more compelling partnership between platforms and government to deal with fraud and abuse. Quick they could be more aggressive. Dont they have an obligation . If you search for covid care on sponsoredu still find banners for probiotics and supplements. Arent they complicit along with other marketplaces . Have you been satisfied with their response . They have a tricky job controlling the algorithm, which might in part be learning from Consumer Practices in realtime on the site. I dont know enough about how amazons Search Engine works because it is not very clear looking over the site protocols. That would be an area for investigation by congress or the agencies in consultation with the company. Flaggednk where we have items like the antiviral claims, which are, per se, illegal claims according to the food and Drug Administration, they have a clear obligation to act. Supplements contaminated with prescription drugs have been sold through amazon. Those need to be expeditiously removed. My first round, i hope there will be. A second round. I yield. We are following our practice of not informing Committee Members whether there will be a second round or not. We now turn to the full committee chairman. Thank you, senator moran. I appreciate the work he and senator blumenthal are doing on this issue. I have a prepared statement i will ask to be included in the record. Following the Opening Statement of senator blumenthal. Without objection. I enjoyed the testimony. Mr. Smith, we are looking right now in the house and senate at covid19 response bill, phase four. This is not a Good Opportunity to see if you need anything in the bill. Said the ftc does not have enough funding or enforcement tools to go after scammers. But you have not asked for any additional equivalents. One thing i would like for you to stress is, you have enough fulfill the task we are talking about today. Up onegard to following senator blumenthals question general,te attorneys maybe that is a way for us to spread some of the responsibility. When you have been able to farm ,ut work to attorneys general does that involve the state enforcement mechanism only, or are there damages requested . Enforcing anything the ftc just does. If you could comment, i would appreciate that. I will go with resources first. We have not identified any costs we cannot cover. We do appreciate very much the additional funding the house procreation Appropriation Committee has recommended. We appreciate the extra resources we got in fy 2020. Whatever resources we get we will put to good use. I will say we have two very specific needs. Legislation to address our authority under section 15 b of the fcc asked. This is the provision we use to return money to consumers. Thedecades, boards around country have said we have authority to obtain equitable monetary relief under section 13 b. Recently the court in the seventh circuit has question that. This is the first court to do that. The great weight of the authority is felt on the ftc side. This is an issue that has been teed up in front of the Supreme Court for next term. We expect the court to resolve that issue by the middle of 2021. An adverse ruling from the Supreme Court would mean the ftc would lose the ability to get monetary relief under the ftc act as we have been doing for decades. Stakes are so high we are asking congress to act now so the fcc ftc can continue returning money to consumers. The second issue we could use some help is the reauthorization of the safe web act. The safe web act was last reauthorized in 2012. It will sunset on september 30 of this year. Authority the ftc unfair and deceptive Practices Authority on content that has an effect on u. S. Consumers. This allows us to address crossborder fraud, which is a real problem. Since 2015 we have had 310,000 complaints from u. S. Consumers against foreign businesses. The other thing it allows us to do is more easily exchange confidential investigative information with our foreign counterparts. We relied on safe web to respond to information sharing requests from 40 enforcement agencies in 17 foreign countries. It has been critically important. A lot of the covid19 fraud we see is also coming from overseas or canada. Two things we could really use help with, 13 b and safe web. Ags, weect to state wetinely have task force participate in task forces, regular meetings with our state asian counterparts. They will frequently be coat plaintiffs in co our cases where they have a better authority than we do to return money to consumers. We sometimes refer cases to them. They sometimes refer cases to us. One of our biggest recent cases was our 170 million settlement with google and youtube. That was a case we did with the new York Attorney general. We have not farmed anything out to the trial bar. Our state partners as far as i know, we have been dealing with assistant attorneys general. We have not been dealing with private lawyers who are hired by the attorney general. In my experience, that has been what we have seen. Beene not also participating in task forces. That is generally done by the folks in our regional offices. I cannot say for sure about outsourcing to a trial bar, but i have never heard about it. Time. Are way over you and senator dataman and i have a privacy bill that would deal with this issue of covid19. Perhaps on the record, our witnesses might tell us if they have had a chance to look at that and if they want to go ahead and enthusiastically endorse this great piece of legislation. Thank you, mr. Chairman. Mr. Chairman, would you like the witnesses to respond to that now . I will be glad to. I do not want to intrude on your time. They can respond within your constraints. Let us do it very quickly. Based on the sponsors, i have no doubt it is excellent legislation, but i have not had a chance to review it. That means you are offending half the members of the United States senate. Mr. Smith . Thal i cannot speak for the commission. We institutionally believe Contract Tracing legislation would be a big help. Consumers need to trust Contact Tracing apps if they are going to work and after Developers Need to know the rules of the road. In commission has testified favor of broad privacy legislation. That feeling, Contact Tracing legislation would be great, too. [blap] failing, contract Contact Tracing legislation too. I have not been able to look at this bit of legislation. I cant afford an opinion but these are important. They cover part of the problem. This is slightly more to the 30,000 level, would like to see federal National Security standards in different cyber Security Standards which has a multitude of these scams in a variety of ways but maybe we can come back to that issue a little later. Laura maccleery. We would be pleased to review the bill. I regret to say i have more information on funding and resources if that is of interest to the chair. I will make sure you have a response at the end of the hearing to catch up on anything you would like to add to your testimony. Let me turn to senator klobuchar who has been patiently waiting. Thank you to senator blumenthal for holding this important hearing today. We are in a public Health Crisis but also an economic crisis. When that happens there are people who prey on peoples vulnerabilities. You pointed out at the beginning of your remarks, they use coronavirus to exploit american fears, the impact of the scam has been particularly disturbing, people who lost their lives to coronavirus are seniors and the seniors lose an estimated 3 billion annually to financial scams have been targeted for additional scams. Last week in my state we had a scammer that pretended to be the child of an elderly minnesotan and convinced person to send 25 million to an address in connecticut. That is why senator moran and i introduced of protecting seniors from emergency scam asked in may to help prevent scammers from taking advantage of scammers during the pandemic and called on the ftc to protect seniors from the Contact Tracing to educate seniors on how to protect themselves. I start with laura maccleery. Can you talk about how it is critical to have access to resources from Law Enforcement, adult protective agencies to combat these coronavirus scams and with the rise of Online Shopping friday in which Consumer Products are ordered online what is the ftc doing to protect seniors from these scams . I so appreciate the care you and the chairman are showing for this vulnerable population. We know seniors are heavy users of Dietary Supplements, age 5564, 88 of those 65 and older, we have been concerned the supplements deliver on the benefits that are promised on the label. We sued cvs for producing a supplement that was a cbs label that promise to have Macular Degeneration ingredients in it that were effective and even though it was sold next to a product that had the appropriate ingredients so seniors are vulnerable to supplement scams in the way we have highlighted and they also tend to be vulnerable to the kinds of marketing scams that are buyback guarantees and money back promises and fishing scams related to Product Marketing so that is a problem and their health makes them more vulnerable to those supplements or the use of those supplements as substitution for valid medical treatment, a visit to the doctor mister smith, is the ftc planning to take additional measures to protect seniors, victim of a Contact Tracing scam, coordinating with the hhs to consumers, highlight the key measures as part of this coordination. Older americans been a priority of ours for a long time. Our Research Shows that Older Americans are not necessarily victimized at a higher rate than younger people but they suffer more losses when they suffer a monetary loss, some involve the grandparents scam that senator klobuchar outlined and can lead to big losses. In addition to our Law Enforcement efforts, it is focused on educating consumers particularly to these scams. One of our campaigns has been pass it on, a series of article presentations, bookmark activities and it is targeted at Older Americans, you need to give this information to your friend and neighbor and family member, you need to educate them about this scam, allows older people to themselves, weve found it is effective, there are always new scams particularly involving tech support and Contact Tracing where they find Fertile Ground with older consumers. The legislation to protect the personal data, is helpful in making these Contact Tracing more effective and what more should we be doing on personal data as a number of us are working on privacy issues when it comes to personal data and this goes beyond the pandemic. There is a magnifying glass on this issue but what would be helpful . The commission testified on Data Security legislation that would involve Civil Penalty Authority, Rulemaking Authority and expanded jurisdiction for the sec over commentary and nonprofits, majority of commissioners testified for something similar with respect to privacy legislation. Privacy legislation would be helpful now to both tell developers and others working on Contact Tracing issues let them know what is protected and what they can collect and what the contours of the data are as an example. It also would build confidence, consumers need to be confident in these apps if they are going to be effective. Can you answer that one . We followed with interest many of your discussions and debates on private privacy issues and from estate standpoint we have generalized concerns about preemption, the tension between state authority on the one hand and on the other the benefits of a national standard. Sitting back bigger issue that i assume would be a challenge if you were trying to do something quickly on this federally. A special session in june did suggest to our office the Contact Tracing privacy act at the state level characterized as stopgap legislation, it is designed to fill the immediate need while we have a more thoughtful review what the law can look like with respect to Contact Tracing. It has multiple parts some of which are not relevant to your question but essentially it requires Contact Tracing was largely unregulated even though it has deep roots, many rules of the road, operated the way Public Health officials operate it and the scale of the covid19 response brought more people into the business and therefore invited discussion what the rules are. Our new statute does things like requiring participation and Contact Tracing whether it was electronic or the oldfashioned way, knocking on a door, is voluntary. We think it is important because it reduces some of the pushback some citizens have when governments tell them they have to provide information on some sort of penalty. Our statute, stopgap prohibits the use of cell phone Location Information so most apps for public Contact Tracing said they were not interested in doing that at this point and thought it advisable to put the whole thing on hold until theres more thoughtful review of what the rules are to be on that. In the spirit of trying to reassure folks it is okay to participate without wondering what happens to your information and also to ensure there cant be a bureaucratic issue, for tracing for covid19, must be safely and securely destroyed. For a lot of data that we have not thought about yet and may be beneficial but again folks may be discouraged if they think it is an open door so that has been our approach. Senator fisher. Appreciate you holding this hearing today. Suspicious of all types of fraud that comes to their mailboxes and sometimes their front doors. On top of this the coronavirus pandemic has been convergent to all of these. It is increasingly difficult to determine what is real and what isnt. We saw this recently in my state of nebraska, some were confused after they received a valid stimulus money from the cares act in the form of the us treasury. Many thought it was a scam. I believe the treasury has been responsive on this issue. Weve seen skepticism from consumers contacted from Government Agencies for Contact Tracing efforts. In light of these Going Forward how do we improve the challenge between the federal government . We are educating consumers about Contact Tracing and the like. We want consumers to engage with contact tracers. We dont want them to be afraid and shutdown when they get that email. Dont be afraid to engage with contact tracers but dont click on any link in that text message like general schmidt said. For contact tracer, legitimate contact tracer will never ask you for money, your bank account, your Social Security number or immigration status. In addition on our website, ftc. Gov coronavirus scams we have Contact Information for the state boards of health and other information about Contact Tracing to educate consumers, we need to build trust, consumers need to trust these apps if they are going to work the way they are intended to work. What about best practices . Are you trying to reach out to State Government more, so that we can build that Consumer Confidence . We have issued a great deal of business guidance including for contact tracers and Apps Developers where we have been counseling Apps Developers to have privacy and security by design at the beginning of the apps developing process, not if we build it in, that they include privacy protective design features for their apps like decentralization of data so it lives on individual devices rather than one centralized database so the use of anonymous data and better aggregated data for coronavirus, these Contact Tracing apps, they use the data only for stated purposes like general schmidt said when collecting it for Public Health and use it for nothing else and you delete the data when you no longer need it so those best practices would be relevant to a private entity developing a Contact Tracing apps or state board of health developing a Contact Tracing apps. General schmidt, i noticed the enforcement action related to covid19. Have you carried out those investigations, do you feel there has been adequate and proactive coordination from the ftc as well as the Justice Department on these covid19 related issues and other issues as well . Yes i do. We have a good preexisting relationship with our counterparts at relevant federal agencies both at regional offices to the extent they are in kansas city at least nationally to the extent they may not have a regional presence. Those preexisting relationships have been helpful in allowing us, for a context. I feel good about that. As i suggested in my opening there might be some room in a more institutional way to ensure that relationships that cause state and federal between investigation and prosecution stage, that may happen even when there are changes in personnel because so much is based on personal relationships, you have to reinvent the wheel. Beyond that i dont know anything about it. Thank you, mister chairman. We are pleased to have the Ranking Member of the full committee here. Thank you to my colleagues, senator blumenthal, for being vice chair of the committee and all your work on these issues and talk about some very broad issues if i could. My colleagues covered a lot of territory and let me thank you, the Data Security issue, should be included so thank you for endorsing that concept, Data Security needs attention along with privacy legislation. Thank you for that. On this issue of the usual ftc approach which is a first time warning do the witnesses agree the ftc needs a first time Civil Penalty Authority when it comes to the deceptive information and statements given the severity of the problem . Laura maccleery, dont know if you have anything to say or if mister smith wants to comment. There are limitations. There are a number of unscrupulous actors in the marketplace that may disregard warning letters. It is enormously inefficient for the fda or ftc to have to track and go after bad actors multiple times. Weve seen a pattern even in supplements tainted with drugs like amphetamines, they will issue a warning letter and then the company will come back with a slightly tweaked product and keep selling into the same marketplace. For supplements you have a small number of bad actors and a warning letter is insufficient to get their attention. Definitely agree, we were very involved in drafting a new law as related to the same on our opioid crisis, behind the penalties, we look at this, protecting the lives of individuals and in the middle of a pandemic when people reach for solutions seems a reasonable approach. Do you want to add to that . I have a different question for you. I think your question under section 5 we bringing in enforcement action and equitable monetary relief and injunction but no penalties, if they get an administrative order for the second go around we get Civil Penalties. That is what your question was focused on not so much the warning letters. The warning letters in the middle of a pandemic on things people are lifesaving, they are actually causing fatalities, seems like a warning letter might not be Strong Enough given the complexity of this environment and a stronger tool. We have a stronger tool. We could go to court, with respect to every one of the companies we sent one of many to we could go to federal court or the Administrative Law judge and get an injunction. Weve chosen the warning letter route because what we have found particularly with respect to fake yours, the warning letters are astonishingly effective. In 48 hours we can get bad claims taken down and where we cant we follow up with Law Enforcement and federal court or in front of Administrative Law judges. What about flexibility . It is another path like the opiate law where we get Civil Penalties on our first bite of the apple. I would be pretty far out if i offered an opinion. What about our definition of price gouging . Authority, what we in washington prevent unfairness after practices, pretty similar to where you guys are but quite broad so do we need to do more on defining the price gouging standard . Yes. It would be helpful, if congress wanted us to address price gouging specifically it would be helpful to have a statute that gave specific authority and laid out specific guidelines for how high is too high so 35 states that have the same ftc authority we do, they have seen fit to enact the price gouging statute because it doesnt fit neatly. If you want us to address price gouging statute would be a big help. We will get that. We were involved in establishing a standard on manipulation and we thought that was helpful to the cftc and the first. Clarity, with the opioid law if you can get around it they will so far stronger deterrent we can have the better in my opinion, one last question i was going to ask about, lets see. What else do we need to do on some of the larger organizations that have taken advantage of states on their paychecks and the programs for unemployment . Are you talking about Large Businesses that have obtained for example Paycheck Protection Program loans . The views of the system, rings of people who signed up in the state of washington, employment checks given to rings of general schmidt from kansas may have some thoughts on that, when we send it to the irs, that is real criminal theft from the government, there may be additional thoughts. I want to know what we are doing to share that data in general. Identity theft and these issues are something, dont know how many states have addressed those. General schmidt has to offer something. The one thing i didnt well on earlier with respect to Unemployment Benefits that asking about but a similar genre. Weve got a lot of complaints from folks, identity theft, creating false identities to claim payment. Under kansas law i dont have original, jurisdiction for that type of crime so the way weve been handling those is to refer them to our state department of labor that handles the Unemployment Program and we work with federal counterparts whenever it is in their judgment. A little outside kansas law. Thank you very much. Senator o. I think the Ranking Member for having this hearing. I will start where senator cantwell left off and that is the fraud on the unemployment compensation. I am from west virginia. There is an instance that somebody from the same ip address applied 57,000 ways to get a benefit with different names. I am wondering, attorney general schmidt, you mentioned this came up in kansas but the magnitude the we are seeing and also what Additional Resources would you need to combat something of this nature to the great benefit of that . From the vantage deck of the Kansas Attorney general, i am quick to say we might not because i was describing to senator cantwell, the face of the public response, the only thing i might add is something weve thought about, reports and other states problems have been widespread and the reason to think kansas was materially different, there are other programs whether there was at a federal statee unemployment pa the federal government to assist and extend benefit, Medicaid Program comes to mind. Congress has seen to create certain requirements for broad policing by the state to participate in the program. In the unemployment context it does seem a logical area to look. It would make sense in the unemployment context for fraud enforcement. To try to determine where the fraud lies and how to detect it. Something that comes up in this committee all the time, the education of either our elderly or others, i appreciate senator klobuchar bringing up the scanning of the elderly. We have a lot in our rural areas. What do you find is the best way to transmit to people who may not have broadband connectivity, and to prevent you from getting covid19, how do you address that . We are the lead Consumer Protection agency at the state level in kansas. In ordinary times we have robust Consumer Education and prevention program, we do a lot of in person presentations around the state whether it is Nursing Homes, senior centers, people spend a large proportion of their time talking with kansans, to avoid losing your money in the first place, better for you and better for us so we can focus on the back end so that is how we normally do it. As your question implies, we are less mobile, communicating remotely. That disables one of our principal tools for reaching kansans which is go where they are and talk with them. We struggled with that. We are doing more online and recognize the limits that are not effective because our consumers are not able to access that programming but we think there is a number of kansans we dont normally reach online, we could reach online, we are doing that now, better than not doing anything so we push that but i have struggled very much with how we reach those pockets of individuals in the state we cant reachc digitally because they dont have suitable Internet Access and they cant reach them because of chloroquine covid19 related restriction. A lot of those are vulnerable populations, brings a difficult question. I have one more question to mister smith. Weve seen a big increase towards the vulnerable population, this is my ftc mister smith, what limitations does the ftc have . Ive created an apps enacted that would increase false advertising and perceptive acts wondering if that is a helpful tool if you are aware of it and what additional tools you might need, breaking a large advertising scams. Im familiar with this act. We may have provided Technical Assistance and we are happy to continue working with your office. With respect to specific tools that we could use i mentioned earlier reauthorizing the safe web act, introduced, cosponsored a bill that would reauthorize the act, important for foreign Law Enforcement in some of these covid19 scams are coming from outside the country. The second thing is to clarify our authority so for decades and decades we had authority to obtain equitable monetary relief under section 13 b and recently there have there has been one important court, Circuit Court of appeals that called into question that orof the Supreme Court and will be result sometime next year about this time and it would be great to get the authorities to get redressed for 40 years. Thank you. And it is your turn. Thank you for calling us here on the issue of protecting our constituents from covid19 scams, to protect against the transmission of coronavirus and the scramble to keep our families, workers and customers a surge in the scams. And there are 136,000 reports of scams related to covid19 including 477 from new mexico and people reported losing 90 million on these and other followers but it is not just individual consumers, there are increasing reports and contracts with local, state and federal agencies to secure ppe, it was given to a former white house official to provide 1 million respirator masks for use with facilities serving the Navajo Nation that did not meet standards for use in Healthcare Settings by healthcare providers. I want to introduce masks procured by ihs, nofor medical use serving Navajo Nation in new mexico and arizona, i brought this up with the ihs director and said this was absolutely an acceptable. The masks were never used, they are to be pretty savvy consumers when it comes to workplace safety. I have a question from the fda. Laura maccleery, what can this administration do for workers in the private sector, do you support in osha emergency standard. We are on record supporting the development of an emergency we have particularly been working on a large number of exposures even among inspectors but also workers and it may be something about the working condition and close proximity that the these to be hotspots, workers need these protections in order to maintain our food supply and we need a healthy workforce. Backing measures out of congress in several packages for an emergency standard for workers. We think there should be a concerted effort to develop mask standards for workers in the healthcare setting, we think some of that is going on, masks in the healthcare setting protected patient from infection by the Healthcare Worker not necessarily to protect the worker. There needs to be a new urgent effort to make sure workers are dealing with patients are also protected. Laura maccleery, our Online Platforms putting a stop to questionable and fraudulent before they are sold. Theres been a concerted effort by amazon and other platforms to work with federal authorities and cures and treatments but behind that lots more work to do, we need to have a plan for when platforms are selling supplements to the public and actively patrolling them not just during the pandemic and not all platforms, not all of them are free of products explicitly to prevent coronavirus which is a problem. Knowing a vote is on and we are pressed for time, i believe there is a role for attorneys general to play and i hope our witnesses will answer that question on the record. Thank you very much. Thank you very much. Senator baldwin. Can you hear me . Yes, maam. Can you see me . Can you thank you, mister chairman. This march i introduced a bipartisan bill to incentivize states to provide compensation to elderly victims of elderly abuse and exploitation. I called it edithsbill after learning about edith and her family who wrote a letter to me asking that i work on legislation to help seniors get mo back when it is stolen from them especially when it is money earned over a lifetime of hard work. General schmidt, do you believe elder financial fraud and abuse is underreported . And are you Aware National programs or efforts that would incentivize states to provide compensation or restitution to victims who are unable to recover restitution from the offenders themselves. Elder fraud and Financial Abuse are underreported. To what order of magnitude it is not about the principle. In terms of compensation i am not aware of it, it provides compensation to elder victims, the Crime Victims Compensation Program they participate in, that compensation is limited to Violent Crime and financial losses. We make a priority in kansas a Enforcement Actions for restitution, and recovery is second. The collection stage more than liability stage but in principle, i think it would be a very good conversation to talk about whether there is a Compensation Program to assist somebody who has lost life savings as a result of fraud and scams. Thank you. 80, 000 by their longtime financial advisor, they never get the money back that was stolen from them, to uncover the fraud because edith asked for help and her soninlaw recognized a problem when he was attempting to reconcile and Senate Leadership in which you and other attorneys general noted emergency and disaster situation invite abuse and exploitation of vulnerable and isolated populations, seniors who are isolated from family members, loved ones, caregivers during the pandemic and support networks they usually rely on are being targeted by scammers and separation from typical caregivers make seniors more vulnerable and susceptible to such scams. This is one of the things that keeps me up at night right now. We have focused on the Kansas Attorney Generals Office and a couple years ago when i was president of the National Association of state attorneys general we focused on elder abuse issues on a National Basis from the state standpoint. I am very worried that seniors who made the physically isolated and have their contact come to them in termsher home support or go to contact but in very discreet manner they go to a doctors office, every thursday and back but they are now separated from those Early Warning systems that can spot something out of the ordinary and sound the alarm. Im very worried about that. I highlighted it in my testimony and mentioned it in my Opening Statement but i believe one step congress can take swiftly, without controversy would be to include in the some vehicle this year, perhaps the next covid19 bill the text of senate bill 2379, the latest incarnation of legislation working on now for several years from a state standpoint the we began the advocacy, bipartisan asking for this change in statute to use our existing, already Skilled Resources in control units outside the exit doors of the nursing home longterm care facility and reach the type of isolated individuals in the Medicaid Program you are talking about so thank you. Me has run out so i yield back. Senator cinema has joined us. Thank you, mister chairman. Scammers are using this to defraud americans which arizonans have responded to thousands of scams related to the sec for losses for arizona families so far. Scams are not just a financial concern, believing certain products can prevent or cure covid19 when there is no scientific basis to suort these claims. There were counterfeit personal protective equipment which went to First Responders and continue to work on federal, state and local level to ensure adequate resources before they happen and returning funds and punishing scammers. Before i moved to questions i thank senator o for stopping false advertising during this pandemic for civil and criminal penalties and bipartisan support for this legislation. My first question is for attorney general schmidt. Scammers are using fear and confusion, recently i teamed up with Arizona Attorney general to warn arizonans about common coronavirus cams including selling fake coronavirus vaccines or treatments to scare families and individuals. Scammers are calling seniors and threatening to cut off stimulus payments for personal information. This not only hurts the victims but charitable initiatives to help vulnerable communities respond to the virus. How to distinguish between scams and legitimate offers of assistance and are there Additional Resources states need to effectively fight these new pandemic related scams. A difficult question because mixed messaging is the bane of messaging and we are normally on the page of dont answer the phone, dont respond to the inquiry, just hang up on a bad guy if you dont know them and now we say this is true but we like you to respond to contact tracers when they engage with you and that creates a difficult message to convey 12 vulnerable population. I can tell you what i messaging is when i talk to kansans. I usually say it boils down to two simple points. How do you separate the legit from the village it . If you didnt initiate and you the consumer didnt initiate the contact, then just assume it is not legit. That gets me in trouble with some legitimate businesses and publicsector folks but from a Consumer Protection standpoint it is a straightforward message. If you think you need a widget at your breakfast table initiate the contact with the seller of widget, that is point one and then the oldfashioned advice, whether it is online, do business with people you know and trust, shop local, shop reputable retailers and retail space. It is not perfect but those two principles are usually what i te f appreciate that. My next question is for mister smith. Many organizations have experienced severe shortages of ppe, cleaning and disinfectant supplies and other necessary items that would help reopen safely and smartly. As the virus continues to surge in places like arizona, local businesses, schools, Nursing Homes and Healthcare Facilities are continuing, what advice do you have for businesses and organizations that want to buy supplies to avoid fraudulent our efforts with respect to ppe have been focused on shop at home scams where company is offering to sell ppe and you order the ppe, so the folks we are protecting are generally consumers and not businesses. We have several more in the pipeline. I would say what we a enforcing is the telephone order rule which requires if youre not going to deliver on time you provide a notice a refund with respect to those larger institutional purchases that you are talking about we also have been working with the department of justice which has been extraordinarily active under the defense production act. A lot of our fulfillment issues have followed on price gouging under the dpa. There are unscrupulous sellers selling counterfeit products, price gouging taking advantage of institutions needs at this time of emergency so a lot of that is being addressed by criminal authorities, the department of justice Price Gouging Task force. My time is expired, appreciate it. Senator blackburn has joined us as well. Thank you, mister chairman. I want to go to the issue of privacy and general schmidt, you mentioned in your statement, lets look at the issue of protecting private information and if it falls into the hand of scammers, what are you doing to make certain that people are not being scammed based on their information for Contact Tracing . What we learned when we look at the virtual space whoever has that data, in possession of that data that they own the virtual view, they have access to this and begin to use that to follow you and to share your information with outsiders. So lets talk to you or start with you and then just if each of you will add, i want to hear about what is being done to protect privacy, that data and the followup information via Contact Tracing. I appreciate the questi. Dont mean to sound glib but in this space i think the road to hell is paved with good intentions and i worry in the Contact Tracing space because we have grown so rapidly into that Data Collection that perhaps weve not put in place the ordinary safeguard we would normally put in place with any entity or business collecting large amounts of personal data to contain the spread of the virus. Ive done it because we need a more balanced conversation. I wont repeat myself but our legislature characterize the stopgap Contact Tracing privacy road, limitations on distribution and the like. For all that data being collected, the digital stuff developed here, also Data Collected the oldfashioned way once it is collectedimitations are free to participate openly and legitimate tracing numbers. What i heard you say is we need to have a federal preemption and federal standards for the retention, collection and retention of this data. An imrtant caveat is this and this is my state role coming out. I understand the importance of a federal standard. Make sense. I would suggest we dont want complete federal preemption of state enforcement and we also dont want yes. We also dont want to compel state ags to go to federal court, follow federal rules to enforce a federal law. If i wanted to do that i would try to be a us attorney. Im a state actor. It always seemhal standard wit to privacy but to allow states to independently enforce the standard in state court with state procedures and state rules as long as we hold folks to the same standard. Time is about to run out, should it be consumers, the Online Consumer has the ability to choose to opt in to share that information or to opt out if they dont want the entity collecting and holding that information to share it with third parties. Is that something that should be granted to them or a protection afforded to them . As you know better than i, that is at the core of a broad and robust policy debate but i am on the general side of the debate that suggests my personal data is my personal data and i should decide with whom it is shared and reshared. I will yield back in the interest of time. I have got to go vote, i will turn it over to senator blumenthal. We are exiting this room by 5 45, should breathe a sigh of relief that it cant last much longer. I want to ask with noteworthy Cyber Security related to twitter serving as social engineering, these attacks evils while increasing harm to americans. Your testimony indicated these threats are responsible for, quote, upwards of 93 of data breaches. How congress can dry increased attention to these risks for ocing in the first place. Es. There is ideally federal National Cyber Security Standards. There are several standards and technology. Federal standards in place, to freely combat social engineering, you go far and wide, you have to get the private sector to some degree involved and motivated for privacy standards. If you asked what is the best framework to use in this particular case i point to the department of defense, Cyber Security model certifionsea, very good model where you have five levels of ramp up in the sense of making sure you comply more over time for resilience against scams like this, and basically the ultimate effective solutior scams that you see awareness, train the elderly, they are doing a good job of that. And also protect the standards of protecting just the home pc but also Corporate Networks ou standards so everyone can comply. General schmidt, thank you, derek, i have known you since you are a senate staffer. On behalf of fellow kansans i appreciate your presence with us today for all of us. I now recognize senator blumenthal. I join in thinking you as a former fellow attorney general and just say next time we have a hearing and we can do kansas in the set of fear. I want to ask you specifically because mister smith has said he would welcome a price gouging law at the federal level and i agree because right now there is no federal price gouging law. Encountered this issue when i was state attorney general, urging the then attorneys general of the United States to take action, and the ftc and they said to me, well, we have no federal law. And in kansas, you have a price gouging law that says that a price increase i that says that a price increase is presumed unjustified if it exceeds by 25 the precrisis level. Tell me how you feel about that law, whether you think it has helped or harmed your offices ability to bring enforcement action and whether you would recommend it to others in the United States senate and thehec. Senator, i think it has been useful for kansas, as mr. Smith has suggested a couple of times. Sure, prior to enactment of that while we could try to use our general kansas version of the authority. We dont have an unfair standard butgege we have an unconscionabe standard to deal with price gouging. It is really clunky to do that and its much better if there something that looks more like a bright line standard. That way Everybody Knows what the rules are, and our experience has been, by having that on the books with that 25 presumption, it has allowed us to give voluntary compliance almost universally, at least from legitimates. And scammers are crooks and scammers, thats a different category that youre talking about price regulation, youre talking given with very legitimate enterprises and the brightline rule in law is very helpful in bringing them into compliance without the need at least it has been for us. Clarity is always good for enforcement. Let me ask you, and this this a littleitbecause senator moran it here. If we were to adopt a federal statute, i personally would be against making it preemptive of all state laws, broadly printed. I dont know how you feel about the issue of preemption when itr other federal statutes . Philosophically, as i suggested early on, i am a state sky and so not surprisingly im not a fan of federal preemption generally as a philosophical matter. Having said that, i recognize there are times it makesersenat, i understand why you cant have as a practical matter 50 with territories different sets of standards folks to manage data privacy. That, anding i say on im quick to say this is always true, but its particularly true in this area, i speak only for myself, i have colleagues in the state and territory General Community in a very different views on this. But speaking for myself, when congress has made the determination appropriately by subject matter for a federal standard, in some area, lets a ta priva or maybe its on price catching, whatever it is, as a general matter if thats going to best what congress does and its going to preempt states from having a different standard, my own preference wod be dont go further than that in the preemption. Dont preempt me from having a state law that codifies in state law the same standards, so its the same performance thats required of the regular entity, that ihen in force inpendent under state rules in state court with our state procedures because thats whate. And perhaps in some larger stathe very large conser proction shops, they have folks or custom everyday to going down and litigating in federal court and enforcing federal law, maybe its a hipaas statute or whatever it may be but thats not true for us and i think its not true for a lot of smaerons, just to be br than should but just to make the point, ill overstated, i mea i have enough to do enforcing the laws of the state of kansas that i was hired i might voters to enforce. Enforcing federal law is not a great privilege that t i aspire to. Its Something Else to do. Its not very high on the peckin order. I would much rather, if congress is going to set the standard, set it but did let me work with oneap legislation, perhaps in addition to letting me go to federal court. Iob have no objection to thatdon option. Let me work with my legislature to find a way we can bring state law alongside and enforce that standard our way. Thank you. I appreciate your perspective which are think is very valuable. Tracing apps are not regulated under hipaa or any oth privacy laws. I have introduced bicameral legislation to regulate these acts. The proposal is called the Public Health emergency privacy act, but isnt there more than bash that more that the ftc could do . I know you have issued general guidance but nothing recent and nothing specific, as far as im aware, such as advisory notices to the tech co if the system of Contact Tracing is going to have any chance of work, privacy has to be assured to consumers. That is the ftcs job and im concerned that the f has been silent. So the privacy contact racing weng would address that in the absence of any special federal leslation using our unfairness into such an authority. And i cant, adding specific companies or any specific investigations whether we might of them open or not but this is an area where we have been heavily focused part of that is because consumers, youre right, consumers have to trustcontact e going to work. Apps developers also need to know theules of the road, so, we have recently within the lase five or six specific points that they should take into account when developg now, some of these are not going to be anything new to you, like privacy by design, for example. F interesting which is, use privacy protective design features, such as decentralized protocols. So, one of the things that i think is really interesting about these contact racing apps that weve been running into recently is that they dont actually collect everybodys location in one big database, and everybodys Health Information in one big centralized database. It lives here, and it is, and i have my bluetooth turned on, and you have your bluetooth turned on, and it has, these devices all have a single bluetooth identifier and if i test positive for coronavirus then that gets uploaded to the database and you dial into the database and you see, is anyone in any of ese bluetooth ideas that ive been in close proximity with, is in the database or not . So, by using those kind of decentralized protocols we solve a lot of privacy issues up front. Other guidance which, again, no surprise, dont use identifiable data, use aggravated data to the things like display heat maps for where there is particular risk of suyou dont need to have even unique personly identifiable data. The aggregated data will be just fine. So, we have in the last month or so issued business guidance for App Developers but, you are right, that this is an area where we need to be vigilant and we are heavily focused on it because this is the privacy issue but 2020. For 2020. It is one of the key privacy issues and has such freedom implications, as you know, as well or better than i, and im and specificity. More information made available to the public, i am aware ofthof decentralization, the use of bluetooth, amazon and google are working on systems. There is a coalition of groups that is hoping, i think, to have it ready by the end of the summer but an explanation to the American Public about how this data is safe, what those rules of the road will be and how they will be impervious or at least highly protected against intrusion or interference. I think it would be very valuable. Xcour consumer ad so far has to spot a scam. If they ask for money, its not legitimate, that kind of stuff. But we might have to explain that this is what a Contact Tracing app does and how it works. Because, as you know,s you well know, Contact Tracing does not work unless you reach a threshold level of participation. And now, we are nowhere near anywhere in this whole country, and very few places in the world, if any have reached that threshold level. So you know, we talk so broadly and frequently about, we need testing, we need Contact Tracing, we need a vaccine, we need therapeutics, and in some ways the Contact Tracing maybek the most difficult of all to achieve because we dont have that trust and credibility. So, today but i do not believe there are very many statements of help state boards of health that have Contact Tracing apps and i do think in the past, cases passed a contact racing law but i have heard only one or two states that have developed these apps and then of course the apps are going to have to be able to Work Together, right . Virginia will have to be with oklahoma and the different apis, whether it be google or apple, will have to Work Together so, it is a significant challenge. Right, well, we can talk about a lot more. I have one more area of questioning that i want to cover. You mentioned that the warning letters are, i think you said, effective, maybe even very effective. Maybe in some cases, but i talked about 255 warning letters. A lot of those scammers have come back, maybe not with exactly the same language, but they are back, and in some part due to the lack of vigilance on the tech platforms that i mentioned earlier and miss mick larry very articulately described need to be held more accountable but i just want to say about warning letters. Speaking as a prosecutor, you know, i used to try to get actual court judgment. Not even consent order, because you have to go back to court to enforce it. With a warning letter, you have nothing to enforce. It is no deterrent. If you leave here and you drive above the speed limit, 85 miles an hour in a 60 mile an hour zone, and you get a warning letter, the deterrent effect, especially if you know that the next time youll get another warning letter, has very little impact. So, i wonder whether a more aggressive use of, whether it is administrative or actual judicial process for judgments, for fi reform, would be appropriate. There is a lot there and i agree with you 100 th aer by ds a warning letter. There is nothing to enforce, but, in the last, lets say weve been at this for three and a half months, middle of march. Maybe four months. In that time, we have succeeded in getting almost all of those 255 companies to take down the claims and for those that have, that havent. Havent, thereat are some, taking the claims down only to replace it with something that is equally misleading, we are pursuing Law Enforcement action, both in federal court and in front of our Administrative Law judges. Youve seen the fruits of some of that and it is outlined in our testimony, there is a lot more than in the pipeline, though. Those cases take time. Particularly when youre talking about fake, the way that we will typically prove that it is with the expert testimonies. That takes time. It also takes money but i think we have the resources, i think we have the man power to do it. We are doing it but it is not something that can be easily done overnight and so, you know, these warning letters have been very fast and very effective and when not we backing up with Law Enforcement but you are absolutely right that a warning letter on its face is not worth much. W, general smith said that with respect to price gouging that a lot of the challenges just telling companies that are legitimate that hey, look, you cannot do this. You cannot say this, and when you do that, if we can fix the problem through that kind of communication, then we need to be doing that, but i appreciate your concern, absolutely. I think there are all kinds of different potential violations close to the line. Some are in a gray area. You know, when you recommend the equivale of somebody swallowing Hand Sanitizer or Something Like that right. Or bleach or whatever and youre making money from it right. I think that something more than a warning letter may be appropriate. Well, there are also we have been working with the fda, as you know. Yeah. And fda has been as they outlined in their testimony, theyve been bringing act criminally. Weve been making criminal referrals. So, we work with a wide variety of partners. Sometimes in our cases we gete s are involved too. Well defer to them unless they want us to come along with them which has happened in a couple of cases. We can sometimes get relief more quickly than they can. They can do their search warrant our asset freeze. Thank you. At the risk of being tossed out, which has not yet happened to me as a senator, tossed out of throom, im going to close the hearing. But i am certainly interested in following up on many of these issues. I want to thank each of our witnesses, mr. Smith, attorney general schmidt,ll of you for your excellent testimony, and for important for your excellent work. Laws work. We make the laws, but you try to make them work. And i really appreciate your being here today. Im sure the chairman joins me in that sentiment and hope we have an opportunity to talk soon again. This hearing record will remain open for two weeks. During this time, senators are asked to submit any questions upon receipt, the witnesses are requested to submit their written answers to the committee i, again, thank the witness, witnesses, for being here, and this hearing is adjourned. [capte national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] [captions copyright na and this hearing is adjourned. Thank you. Thank you, senator [inaudible conversations]÷yy [inaudible conversations] [inaudible conversations] [inaudible conversations] this morning the House Education Committee looks into how to open school fall during the pandemic. Meers will hear from the Dallas School superintendent, the national pta president at a pediatricswatch live at 10 15 an by cspan3 come online at cspan. Org or listen live. Org listen live with the free cspan radio app. During the summer months reach out to your elected officials with cspans congressional directory. It contains all the contact informion you need to stay in touch with members of congress, federal agencies and state governors. Order your copy online today at cspanstore. Org. Next, remarks by fda commissioner stephen hahn on the current coronavirus treatments and vaccine trials. He spoke during a virtual conversation with the Economic Club of new york. Thanks. Good afternoon and welcome to the 547th meeting of the Economic Club of new york in