Monday night at 8 00 eastern on cspan two. Scams thathearing on have surfaced during the coronavirus pandemic. A Senate Congress subcommittee heard from officials on protecting the public, especially the senior population. Good afternoon. All here today to a hearing entitled acting americans from covid19 scams 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 and agreed 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 consumers fair notice. 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 scams related 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 regulator