The demand for medical and protective products to address the COVID-19 pandemic has led to a spike in international trafficking of substandard and falsified products, according to two experts who work in global security and trade.
Steve Francis, the assistant director of the Global Trade Investigations Division with Homeland Security Investigations and the director of the National Intellectual Property Rights Coordination Center, said Monday that during his more than two decades in law enforcement, he has never seen anything quite like the amount of fraud currently taking place.
U.S. Immigration and Customs Enforcement Homeland Security Investigations has conducted 908 seizures of prohibited COVID-19 test kits, prohibited medications and treatments, counterfeit and prohibited personal protective equipment as well as fraudulent web domains.
Over $7 million has been seized through Operation Stolen Promise over the course of 100 days. Officials have recorded $17,910,833 in disrupted transactions and recovered funds.
Of the seizures, $2,252,198 was related to CARES Act fraud, Francis said.
Francis said when it comes to substandard and falsified products, officials have noticed a shift in the trends. Typically, 85 to 90% of their seizures take place in China and Hong Kong.
“We’ve seen seizures related to over 40 different countries. So now we’re seeing seizures from the UK, Nigeria, Japan, Thailand, Germany. I mean, you name it, every country has bad actors and these organizations are pivoting toward this criminal activity because of the high demand and how profitable it is,” Francis said.
Francis said there has been unprecedented coordination by global law enforcement agencies, and China has been helpful in uncovering scammers.
According to officials at the U.S. Department of Justice, even the terrorists group ISIS has gotten into PPE scams, allegedly using the website FaceMaskCenter.com as a front for peddling fake N95 masks.
ISIS targeted hospitals, nursing homes and first responders. They turned profits into cryptocurrency and raised money for weapons, according to prosecutors.
J.R. Helmig, the global security intelligence innovation leader at SAS Institute in Cary, N.C., had advice for consumers who may be concerned about buying PPE linked to criminal organizations.
“In my personal view, I would be buying things from a known supplier that is not a reseller,” Helmig said. “Those retailers are stepping up efforts to try and validate that supply chain. I’m not saying it’s guaranteed you’re going to get a real product, but there are more efforts ongoing than if you do something through an online reseller.”
Retailers who are working to validate the supply chain include Walmart, Costco and Target.
Francis and Helmig were asked if manufacturers should switch their focus to producing PPE domestically. In Rochester, Lydall is building a new 47,000-square-foot addition to its facility, which will have the capacity to support the production of 140 million N95 respirators or 540 million surgical masks per month.
Lydall produces the interior layer of face masks.
Francis said medical essentials should be manufactured in America, but a two-prong approach is needed.
“We’re highly reliant on other countries that provide all of it. We also need to ensure that as such manufacturing occurs here, that we need to prevent these counterfeits and substandards and fraudulent goods being sold on marketplaces and social media platforms,” Francis said.
There have been domestic cases of PPE fraud. For example, a Silicon Valley investor and his business partner paid workers $20 an hour to take Chinese non-medical masks and repackage them as medically certified KN95.
All fraudulent activities can be reported to firstname.lastname@example.org.