Curbing COVID Cons: Warning Consumers About Pandemic Frauds, Scams, and Swindles (S. Hrg. 117-788)

Summary

Senate hearing document 117–788, Curbing COVID Cons: Warning Consumers About Pandemic Frauds, Scams, and Swindles, before the Subcommittee on Consumer Protection, Product Safety, and Data Security of the Committee on Commerce, Science, and Transportation, April 27, 2021. The witnesses listed are Daniel Kaufman of the Federal Trade Commission, William E. Kovacic, Kevin H. Rhodes of 3M Company, Cynthia Alexander of the Washington Attorney General’s Office, and Bonnie Patten of Truth in Advertising. In the opening statement, Senator Blumenthal says there have been 460,000 reports of consumer fraud in the past year, according to the FTC, at a cost of more than $411 million.

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Issuer: Congressional materials
Document type: Congressional Hearing
Case: Chrg 117Shrg54257

Cite this document

“Curbing COVID Cons: Warning Consumers About Pandemic Frauds, Scams, and Swindles (S. Hrg. 117-788).” Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/chrg-117shrg54257/, SHA-256 384e1fef89186bf1711c89e049b478cc2c0bfef68bac16f14c9d2da201000eba.

Full text

S. HRG. 117–788

CURBING COVID CONS:
WARNING CONSUMERS ABOUT PANDEMIC
FRAUDS, SCAMS, AND SWINDLES

HEARING
BEFORE THE

SUBCOMMITTEE ON CONSUMER PROTECTION,
PRODUCT SAFETY, AND DATA SECURITY
OF THE

COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION

APRIL 27, 2021

Printed for the use of the Committee on Commerce, Science, and Transportation

(
Available online: http://www.govinfo.gov

U.S. GOVERNMENT PUBLISHING OFFICE
54–257 PDF WASHINGTON : 2023

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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

ONE HUNDRED SEVENTEENTH CONGRESS

FIRST SESSION

MARIA CANTWELL, Washington, Chair
AMY KLOBUCHAR, Minnesota ROGER WICKER, Mississippi, Ranking
RICHARD BLUMENTHAL, Connecticut JOHN THUNE, South Dakota
BRIAN SCHATZ, Hawaii ROY BLUNT, Missouri
EDWARD MARKEY, Massachusetts TED CRUZ, Texas
GARY PETERS, Michigan DEB FISCHER, Nebraska
TAMMY BALDWIN, Wisconsin JERRY MORAN, Kansas
TAMMY DUCKWORTH, Illinois DAN SULLIVAN, Alaska
JON TESTER, Montana MARSHA BLACKBURN, Tennessee
KYRSTEN SINEMA, Arizona TODD YOUNG, Indiana
JACKY ROSEN, Nevada MIKE LEE, Utah
BEN RAY LUJÁN, New Mexico RON JOHNSON, Wisconsin
JOHN HICKENLOOPER, Colorado SHELLEY MOORE CAPITO, West Virginia
RAPHAEL WARNOCK, Georgia RICK SCOTT, Florida
CYNTHIA LUMMIS, Wyoming
DAVID STRICKLAND, Staff Director
MELISSA PORTER, Deputy Staff Director
GEORGE GREENWELL, Policy Coordinator and Security Manager
JOHN KEAST, Republican Staff Director
CRYSTAL TULLY, Republican Deputy Staff Director
STEVEN WALL, General Counsel

SUBCOMMITTEE ON CONSUMER PROTECTION, PRODUCT SAFETY,
AND DATA SECURITY
RICHARD BLUMENTHAL, Connecticut, MARSHA BLACKBURN, Tennessee, Ranking
Chair JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota ROY BLUNT, Missouri
BRIAN SCHATZ, Hawaii JERRY MORAN, Kansas
EDWARD MARKEY, Massachusetts MIKE LEE, Utah
TAMMY BALDWIN, Wisconsin TODD YOUNG, Indiana
BEN RAY LUJÁN, New Mexico

(II)

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CONTENTS

Page
Hearing held on April 27, 2021 .............................................................................. 1
Statement of Senator Blumenthal .......................................................................... 1
Statement of Senator Blackburn ............................................................................ 3
Statement of Senator Klobuchar ............................................................................ 54
Statement of Senator Thune ................................................................................... 56
Statement of Senator Markey ................................................................................. 58
Statement of Senator Luján .................................................................................... 62

WITNESSES
Daniel Kaufman, Acting Director, Bureau of Consumer Protection, Federal
Trade Commission ............................................................................................... 5
Prepared statement .......................................................................................... 6
William E. Kovacic, Global Competition Professor of Law and Policy, Pro-
fessor of Law, Director, Competition Law Center, The George Washington
University Law School ......................................................................................... 11
Prepared statement .......................................................................................... 13
Kevin H. Rhodes, Senior Vice President and Deputy General Counsel, 3M
Company ............................................................................................................... 19
Prepared statement .......................................................................................... 21
Cynthia Alexander, Assistant Attorney General, Consumer Protection Divi-
sion, Washington Attorney General’s Office ...................................................... 32
Prepared statement .......................................................................................... 34
Bonnie Patten, CEO, Truth in Advertising ........................................................... 36
Prepared statement .......................................................................................... 37

APPENDIX
Response to written questions submitted by Hon. Richard Blumenthal to:
Daniel Kaufman ............................................................................................... 67
William E. Kovacic ........................................................................................... 72
Kevin H. Rhodes ............................................................................................... 73
Cynthia Alexander ............................................................................................ 73

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CURBING COVID CONS:
WARNING CONSUMERS ABOUT PANDEMIC
FRAUDS, SCAMS, AND SWINDLES

TUESDAY, APRIL 27, 2021

U.S. SENATE,
SUBCOMMITTEE ON CONSUMER PROTECTION, PRODUCT
SAFETY, AND DATA SECURITY,
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10 a.m. in room
SR–253, Russell Senate Office Building, Hon. Richard Blumenthal,
Chairman of the Subcommittee, presiding.
Present: Senators Blumenthal [presiding], Blackburn, Klobuchar,
Thune, Markey, and Luján.
OPENING STATEMENT OF HON. RICHARD BLUMENTHAL,
U.S. SENATOR FROM CONNECTICUT
Senator BLUMENTHAL. Good morning, everyone.
Thank you so much for joining us, all who are watching, and to
our witnesses, particularly thank you for being here today, whether
in person or remotely, and I want to say a special thanks to the
Ranking Member, Senator Blackburn.
This subcommittee has been traditionally very, very bipartisan
and we are beginning our hearings today in a very bipartisan way.
The witnesses that we have before us are the result of a bipartisan
consensus and there is nothing partisan about consumer protection.
We all want to protect against the abuses and deception and lies
that all too often we see in the marketplace.
We are completing a year of unimaginable heartbreak and hard-
ship for all Americans, a year of pandemic crisis, healthcare crisis,
and consumer crisis. This year of heartbreak for Americans has
also been a breakout year for the swindlers and con artists. They
have seen it as a bonanza and, in fact, they have made it a bo-
nanza.
There have been 460,000 reports of consumer fraud in the past
year, according to the FTC, at a cost of more than $411 million,
which represents a 45 percent increase in the numbers of reports,
83 percent rise in the dollars lost.
So these reports show the results of a flooding of online market-
places with fake personal protective equipment, sophisticated coun-
terfeits, and other kinds of frauds. These sophisticated counterfeits
have infiltrated the supply chain, often unchecked by big tech plat-
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forms, putting unsuspecting consumers and health care workers at
risk. Truly it has become a matter of life and death.
As consumers have grown more fearful for their safety, social
media platforms have become a mega mall for snake oil peddlers
hawking fake cures and prevention. These platforms have been
way too slow to respond. They’ve done too little too late and then
often only as a result of vigorous prodding, in fact, very strong
kicks by consumer advocates and Members of Congress as well as
state AGs.
Hucksters, like Joseph Mercola, have spread medical misinforma-
tion to millions, denying the science of COVID–19 while reaping
profit windfalls, selling expensive vitamins and supplements as
cures. One of them, he has advertised is this Vitamin C liposomal
with his name which he has said will successfully fight COVID and
advised people to take it rather than get the vaccine.
To this day, despite FDA warnings, he tells consumers you likely
don’t need a vaccine. In fact, he creates false fears about the vac-
cine and then he offers these supplements, such as Vitamin C, as
prevention strategies and treatments readily available. They’ve
been shown, he says, to be effective. Of course, he’s not only play-
ing fast and loose. He’s lying.
In protective equipment, we’ve seen similar kinds of scams, real
and fake protective equipment which endangers lives. It literally
puts lives at risk because the fake 3M devices are no substitute for
the real ones.
Not only have these social media platforms been enablers, know-
ing and recklessly enabling these kinds of frauds to occur, but
they’ve also been laggard and lacking in taking action when they
had fair notice that many of these frauds were exploiting their
platforms.
The Federal Trade Commission has been a line of defense but all
too often what we’ve seen is warnings rather than court action. The
time for warnings is over. The FTC must go to court against
wrong-doings. It needs to create deterrence through hefty legal
penalties and strict court orders and it needs to refer for criminal
action more often and more effectively these kinds of cases.
The perpetrators of these frauds don’t like to pay money. They
don’t like to pay penalties. They don’t like to pay restitution, but,
most importantly, they don’t like to be behind bars and that’s what
the FTC has to seek. More than daring, it’s teeth. This agency has
to use those teeth through the penalties that have been provided,
new penalties provided most recently by Congress.
So we need to bolster and support the FTC, providing more legal
tools and resources where necessary to defend consumers and as a
first step to ensure that the FTC can get consumers money back
when they are scammed, we need to restore 13B authority that was
taken away by the Supreme Court when it caved to a shadowy
campaign to disarm the FTC. Unless Congress acts, the FTC will
have in effect both hands tied behind its back.
Over the last 4 years, the FTC has secured over $11 billion in
refunds for consumers. There is approximately $1.8 billion of Amer-
ican money at stake right now, and I hope that Congress will act
promptly and effectively to restore that authority.

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Let me just say in summary the path forward seems clear. The
FTC must act more swiftly to stop scams, perhaps going to court
without Department of Justice authority. It has to seek financial
penalties against wrong-doing more vigorously. It has to hold the
platforms accountable for aiding scams, and in that regard, we
need to re-examine and revise Section 230 to enable victims to go
against the platforms, as well, and the FTC needs to work with law
enforcement to bring criminal penalties as a deterrent.
There’s a lot of work ahead and I look forward to tackling it in
combination with the Ranking Member, Senator Blackburn. Again,
my thanks for your leadership over the years, Senator, and I turn
to you.

STATEMENT OF HON. MARSHA BLACKBURN,
U.S. SENATOR FROM TENNESSEE
Senator BLACKBURN. Thank you, Mr. Chairman.
I want to welcome our witnesses who are with us and also join-
ing us virtually, and I want to thank you and your staff for the
work that they have done on pulling this hearing together.
People are truly spending more time on the Internet than ever
before and many times this is through work or school or just sim-
ply connecting with family and friends, but the fraudsters are
aware of this and they are wise to how people are on the Internet
and where they are vulnerable and we continue to see this play out
many times.
Ms. Patten, I know you and your group see quite a bit of it.
Even in the earliest days of the pandemic, it was difficult for peo-
ple to get accurate information about the nature of the virus, how
severe it was, where it started, how it spreads.
The disinformation took on a life of its own, becoming essentially
a media pathogen. It’s no surprise that when PPE items and house-
hold cleaners were out when you went to the grocery store, the big
box, that buyers flocked to the Internet to get what they needed.
Tennessee has taken the lead in cracking down on some of the
most high-profile scandals in this space. In the first consumer ac-
tion brought by any state attorney general’s office in response to
COVID–19, Tennessee shut down a hoarding and price-gouging
practice that deprived rural East Tennessee and Eastern Kentucky
of hand sanitizer and other essential cleaning supplies.
Another Tennessee company falsely claimed that its products
could protect surfaces from COVID–19 for 90 days. They falsely
claimed that their products were FDA-and EPA-approved and
falsely implied that it was being used by companies, like McDon-
ald’s and Panda Express. The attorney general’s office immediately
launched an investigation. The company settled, paid their fine,
and promised to stop making false and misleading claims.
Individual consumers weren’t the only victims of scam artists.
Our Federal Government has been defrauded in countless in-
stances. The Paycheck Protection Program or PPP has saved thou-
sands of small businesses and kept hundreds of thousands of peo-
ple on the payroll when the economy came to a standstill.
However, according to a report issued by the Small Business Ad-
ministration’s Office of Inspector General, nearly 55,000 loans were

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made to potentially ineligible businesses, totaling more than $7 bil-
lion.
While I know we’re all ready for COVID to be over, it’s important
that we remain vigilant during this next and hopefully last phase
of the virus and that soon we’re all going to see things return to
normal.
Thank you, Mr. Chairman.
Senator BLUMENTHAL. Thank you, Senator Blackburn.
I now would like to call remotely on Chairman Cantwell if she’s
available. Apparently she is not here as yet.
Is Senator Wicker available? If not, let me move ahead to intro-
duce the witnesses.
The two who are with us this morning in person, first Daniel
Kaufman, who is Acting Director of the Bureau of Consumer Pro-
tection at the FTC. He served for 8 years as the Bureau’s Deputy
Director and before that, before joining the FTC in 1998 as a staff
attorney, he was a litigator. He spent 4 years as a litigator in New
York City. He received his B.A. from Cornell University and grad-
uated Cum Laude from the University of Pennsylvania Law School.
Bonnie Patten, who is the CEO of Truth in Advertising, grad-
uated from Boston University and received her JD from Boston
University and her B.A. from the University of Pennsylvania. Prior
to helping found the Truth in Advertising organization, she spent
most of the past two decades working as a litigation attorney in
New Haven, Connecticut.
We’re joined remotely by William Kovacic, who is Global Com-
petition Professor of Law and Policy at the George Washington
University Law School. Professor Kovacic has taught antitrust, con-
tracts, and government contracts. Before joining the Law School in
1999, he was the George Mason University Foundation Professor at
the George Mason University School of Law, and he was a member
of the FTC from January 2006 to October 2011, and he chaired the
agency from 2008 to March 2009.
Kevin Rhodes is Senior Vice President and Deputy General
Counsel at 3M. He leads that company’s Legal Team on a global
basis and he has helped lead 3M’s ongoing efforts during the
COVID–19 pandemic to address fraud, counterfeiting, and price
gouging of personal protective equipment, most notably of 3M’s
N95 respirators, and I held up one of them a few moments ago.
Prior to joining 3M in 2000, he was a partner at Kirkland Ellis
in Chicago where he specialized in intellectual property litigation.
He received his JD Magna Cum Laude from Northwestern Univer-
sity and his B.A. from Grinnell College.
Cynthia Alexander is Assistant Attorney General, Consumer Pro-
tection Division, in the Washington Attorney General’s Office. She
played a significant role in leading her office’s response to COVID–
19 scams and COVID-related consumer complaints.
Prior to joining the Attorney General’s Office, she served for 17
years as a trial attorney in the Civil Division of the United States
Department of Justice. She holds an MBA and a Ph.D. in Clinical
Psychology and she is a licensed psychologist in the state of Wash-
ington.
So we welcome all of you, and let’s begin with Daniel Kaufman.

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STATEMENT OF DANIEL KAUFMAN, ACTING DIRECTOR,
BUREAU OF CONSUMER PROTECTION,
FEDERAL TRADE COMMISSION
Mr. KAUFMAN. Thank you.
Chairman Blumenthal, Ranking Member Blackburn, and Mem-
bers of the Subcommittee, I am Daniel Kaufman, Acting Director
of the Bureau of Consumer Protection at the Federal Trade Com-
mission.
My written statement represents the views of the Commission
but this opening statement represents my views and not nec-
essarily the views of the Commission or any individual commis-
sioner.
I’m pleased to appear before you today to discuss protecting
Americans from COVID–19 scams. My written statement describes
the extensive work that the FTC has accomplished and continues
to accomplish in combating COVID-related frauds.
The FTC’s Bureau of Consumer Protection is comprised of eight
divisions and eight regional offices and each has been actively
working on COVID-related issues. So far, we have brought more
than a dozen law enforcement actions, engaged in extensive con-
sumer education efforts, kept the public informed about the scams
we are seeing, and have also directed the removal of deceptive
claims related to COVID made by more than 350 companies.
Our most recent law enforcement action utilized the new civil
penalty tool that Congress recently gave us and we are very thank-
ful for that important new statutory authority as well as the in-
creased funding that we have recently received.
As part of that work, the FTC is committed to expanding its out-
reach to lower income communities. Just last month, we launched
a new way for legal service organizations to report fraud and other
illegal business practices that their clients may have experienced.
Through the Community Advocate Center on our Complaint In-
take Site, reportfraud.ftc.gov, we aim to get their fraud reports into
the hands of law enforcers and connect people with tailored advice
on how to try to recover their money.
I had hoped to use my opening statement to describe in more de-
tail all of the work set forth in the FTC’s recently released COVID
Report that the agency has done related to the pandemic. Instead,
I would like to discuss last week’s Supreme Court decision in the
AMG matter, which held that returning money to harmed con-
sumers and disgorging the ill-gotten gains of lawbreakers are not
authorized by Section 13(b) of the FTC Act. This decision elimi-
nated the primary tool that the FTC uses today to return money
to harmed consumers.
Over the past four decades, the Commission has relied on Section
13(b) to return billions and billions of dollars back to consumers in
a wide variety of cases, including telemarketing fraud, anticompeti-
tive pharmaceutical practices, scams that target seniors and vet-
erans, and other deceptive business practices.
I am a 22-year veteran of the Federal Trade Commission and it
is not hyperbole to say that this decision will dramatically curtail
the ability of the FTC to effectively protect consumers.
For example, looking at the cases that the FTC currently has in
litigation, the Supreme Court’s decision, if left unfixed by Congress,

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puts about 24 active consumer protection and competitive litiga-
tions at real risk with potential consumer harms of upwards of $2.4
billion.
In addition to the huge challenges presented by the AMG deci-
sion, some courts recently have also ruled that the Commission
cannot seek injunctive relief under 13B in cases where the unlaw-
ful conduct is no longer occurring, even when there is a reasonable
likelihood that it will recur. This magnifies the challenges before
the Commission.
Congress can fix this situation and at a minimum restore the
FTC to the authority that it has used for almost four decades to
protect American consumers and the longer it takes to implement
the fix, the longer the FTC will be greatly weakened in our ability
to protect consumers.
Let me be clear. Although the AMG decision has had a very sig-
nificant impact on our ability to protect consumers and indeed to
protect honest businesses, there are other tools and authority that
we will use and are using to do the best we can under these cir-
cumstances.
The FTC will keep fighting but there will be more litigation that
will last longer and use up more resources. There will be less pro-
tection for consumers and the only benefits will accrue to
lawbreakers.
Thank you for the opportunity to testify, and I welcome your
questions.
[The prepared statement of Mr. Kaufman follows:]

PREPARED STATEMENT OF DANIEL KAUFMAN, ACTING DIRECTOR, BUREAU OF
CONSUMER PROTECTION, FEDERAL TRADE COMMISSION
I. INTRODUCTION
Chairman Blumenthal, Ranking Member Blackburn, and Members of the Sub-
committee, I am Daniel Kaufman, Acting Director of the Bureau of Consumer Pro-
tection at the Federal Trade Commission (Commission or FTC).1 I am pleased to
appear before you today. Despite the unprecedented challenges of the past year, the
Commission has endeavored to protect consumers and competition. A key part of
this work has been combatting COVID-related harms. The Commission staff re-
cently released a report describing the major challenges consumers face from the
pandemic and the Commission’s efforts to help: using reports from consumers to
identify and respond to emerging unlawful practices in real time; filing more than
a dozen law enforcement cases; directing the removal of deceptive claims related to
COVID–19 made by more than 350 companies; and educating consumers and busi-
nesses through more than 100 alerts on COVID-related topics.
The civil penalty authority in the newly-enacted COVID–19 Consumer Protection
Act 2 and additional funding the Commission recently received from the American
Rescue Plan will enable us to intensify our efforts to protect consumers from unscru-
pulous actors that seek to exploit the pandemic and its economic fallout. The Com-
mission just brought its first action seeking monetary penalties under its new au-
thority, targeting deceptive COVID–19 marketing of vitamin D and zinc products.3
In this testimony, I provide a high-level summary of the Commission’s efforts.

1 This written statement presents the views of the Federal Trade Commission. The oral state-
ments and responses to questions reflect my own views and do not necessarily reflect the views
of the Commission or any Commissioner.
2 Pub. L. No. 116–260, 134 Stat. 1182, Division FF, Title XIV, § 1401(b)(1).
3 FTC Press Release, In First Action Under COVID–19 Consumer Protection Act, FTC Seeks
Monetary Penalties for Deceptive Marketing of Purported Coronavirus Treatments, https://www
.ftc.gov/news-events/press-releases/2021/04/first-action-under-covid-19-consumer-protection-act-
ftc-seeks (Apr. 15, 2021).

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II. COVID–19 CONSUMER PROTECTION EFFORTS
The Commission has worked diligently to identify and address the effects of the
COVID–19 pandemic on American consumers and businesses. The Commission’s re-
sponse to COVID–19 has included law enforcement, consumer education and out-
reach, and data collection, each of which is discussed in more detail below.
a. Law Enforcement
Most recently, the FTC deployed its new authority under the COVID–19 Con-
sumer Protection Act to charge that a chiropractor and his company deceptively
marketed products containing vitamin D and zinc as scientifically proven to treat
or prevent COVID–19.4 The Federal court complaint seeks civil penalties authorized
by the new statute and an order barring baseless health claims.
This action is merely the latest in a long line of enforcement efforts that began
early in the pandemic. The FTC issued its first warnings to consumers about
COVID–19 related scams in February 2020, even before the declaration of a na-
tional emergency.5 As schemes proliferated in response to demand for scarce goods,
to peddle treatments and cures, and to exploit consumers’ and small businesses’ fi-
nancial distress, the FTC moved quickly to challenge deceptive claims.
The agency filed its first court action 6 just one month after the national emer-
gency declaration.7 In that case, the FTC alleged that a company falsely claimed
to be an approved lender to induce struggling small businesses to submit applica-
tions for the Paycheck Protection Plan loan program, administered by the Small
Business Administration (SBA).8 In response, a Federal court order has barred the
defendants from misrepresenting affiliation with the SBA or that they are author-
ized to issue SBA loans.9
In a second action against a government impostor, the FTC sued a company that
allegedly deceived consumers with mailers that featured a Great Seal of the United
States and a mock stimulus check and promised to get them Federal COVID–19
stimulus benefits.10 As alleged in the complaint, rather than assisting consumers
obtain stimulus benefits, the mailers sought to lure consumers to a car dealership.
Companies also have been quick to capitalize on consumers’ concerns about their
health and safety. The FTC has sued entities for allegedly breaking promises to
quickly ship much needed goods, including personal protective equipment (PPE) and
cleaning products.11 In one such action, the FTC sued a website operator that mis-
represented that critical PPE, such as masks and hand sanitizer, were in stock and
would ship the next day. In reality, the Commission alleged, the defendant failed
to ship the PPE for weeks without seeking consent for the delay or offering con-
sumers refunds.12
The FTC also has taken action against the operator of counterfeit websites that
tricked consumers into paying for sanitizing products that were never delivered.13
The Commission obtained a Federal court order that, while litigation proceeds, pro-
hibits the defendants from making deceptive claims, suspends their deceptive

4 See supra n. 3.
5 Coronavirus: Scammers follow the headlines, https://www.consumer.ftc.gov/blog/2020/02/
coronavirus-scammers-follow-headlines (Feb. 10, 2020).
6 Complaint, FTC v. Ponte Investments, LLC, Case No. 1:20-cv-00177 (D.R.I.), available at
https://www.ftc.gov/system/files/documents/cases/sbacomplaint.pdf.
7 Proclamation 9994 of March 13, 2020, available at https://www.govinfo.gov/content/pkg/
FR-2020-03-18/pdf/2020-05794.pdf.
8 See supra n. 6.
9 Stipulated Final Order, FTC v. Ponte Investments, LLC, Case No. 1:20-cv-00177 (D.R.I.),
available at https://www.ftc.gov/system/files/documents/cases/x200042_ponte_inv_-_stipulated
_final_order.pdf.
10 Complaint, In re Traffic Jam Events, LLC, Docket No. 9395 (FTC), available at https://
www.ftc.gov/system/files/documents/ cases/d9395_traffic_jam_complaint_final.pdf.
11 Complaint, FTC v. SuperGoodDeals.com, Inc., Case No. 20-cv-3027 (E.D.N.Y.), available at
https://www.ftc.gov/system/files/documents/cases/202_3135_supergooddeals_-_complaint.pdf;
Complaint, FTC v. QYK Brands LLC, Case No. 8:20-cv-01431-JLS-KES (C.D. Cal.), available at
https://www.ftc.gov/system/files/documents/cases/202_3147_qyk_brands_-_complaint.pdf;
Complaint, FTC v. Am. Screening, LLC, Case No. 4:20-cv-1021 (E.D. Mo.), available at https://
www.ftc.gov/system/files/documents/cases/202_3158_american_screening_-_complaint.pdf;
Complaint, FTC v. Zaappaaz LLC, Case No. 4:20-cv-02717 (S.D. Tex.), available at https://
www.ftc.gov/system/files/documents/cases/ 202_3136_zaappaaz_-_complaint.pdf.
12 Complaint, FTC v. SuperGoodDeals.com, Inc., Case No. 20-cv-3027 (E.D.N.Y.), available at
https://www.ftc.gov/system/files/documents/cases /202_3135_supergooddeals_-_complaint.pdf.
13 Complaint, FTC v. One or More Unknown Parties Deceiving Consumers Into Making Pur-
chases Through: www.cleanyos.com et al., Case No. 5:20-cv-02494 (N.D. Ohio), available at
https://www.ftc.gov/system/files/documents/ cases/complaint_w-a_filed.pdf.

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websites, and bars them from using their websites to collect money from con-
sumers.14
The Commission also has used its enforcement efforts to attack dangerous, false
claims of COVID–19 treatments and cures. For example, the Commission sued a
company that, even after receiving a warning from the FTC, deceptively advertised
a $23,000 treatment plan as a scientifically-proven way to treat COVID–19.15 Dur-
ing litigation, the court ordered the defendants to stop making deceptive health
claims.16
Similarly, the Commission sued a marketer for making baseless claims that his
dietary supplement could treat or prevent COVID–19,17 and issued an administra-
tive order prohibiting those claims in the future and requiring the defendant to no-
tify consumers and retailers that the supplement will not treat, prevent, or reduce
the risk of COVID–19.18
In addition, to protect consumers attempting to replace or supplement income
during the pandemic, the Commission—along with 19 federal, state, and local part-
ners—led a nationwide crackdown against scams making false promises of income
and financial independence.19
Starting in March 2020, the FTC also launched a campaign to challenge compa-
nies’ deceptive COVID–19 claims—directing the companies to cure violations and
pursuing enforcement actions if problematic claims were not quickly removed. To
date, the FTC has issued more than 350 warning letters, many in conjunction with
the Food and Drug Administration (FDA), to sellers and marketers that claimed
that their products could treat or prevent COVID–19.20 The Commission also issued
warning letters with the SBA regarding small business relief 21 and joint letters
with the Federal Communications Commission (FCC) to Voice Over Internet Pro-
tocol service providers and others ‘‘assisting and facilitating’’ illegal telemarketing
calls, including calls to market products such as fraudulent home test kits.22
Warning letters can be issued more quickly than a court complaint, and proved
to be overwhelmingly successful in removing potentially dangerous claims from the
markets. The Commission has monitored responses to these warning letters closely,

14 Preliminary Injunction, FTC v. One or More Unknown Parties Deceiving Consumers Into
Making Purchases Through: www.cleanyos.com et al., Case No. 5:20-cv-02494 (N.D. Ohio), avail-
able at https://www.ftc.gov/system/files/documents/cases/ftc_v_unknown_preliminary_injunc
tion_with_att_a.pdf.
15 Complaint, FTC v. Golden Sunrise Nutraceutical, Inc., Case No. 1:20-cv-00540–DAD–SKO
(E.D. Cal.), available at https://www.ftc.gov/system/files/documents/cases/202_3146_golden
_sunrise_-_complaint.pdf.
16 Stipulation to Preliminary Injunction as to Defendants Golden Sunrise Nutraceutical, Inc,
Golden Pharmaceutical, Inc., and Huu Tieu, FTC v. Golden Sunrise Nutraceutical, Inc., Case
No. 1:20-cv-00540–DAD–SKO (E.D. Cal.), available at https://www.ftc.gov/system/files/docu-
ments/cases/030_-_gs_order_re_stipulation_pi_to_ defs_golden_sunrise_nutraceutical_inc._golden
_pharmaceutical_inc._and_tieu.pdf; Stipulation to Preliminary Injunction as to Defendant Ste-
phen Meis, FTC v. Golden Sunrise Nutraceutical, Inc., Case No. 1:20-cv-00540–DAD–SKO (E.D.
Cal.), available at https://www.ftc.gov/system/files/documents/cases/029_-_gs_order_re_stipu
lation_pi_to_def_meis.pdf.
17 Complaint, FTC v. Ching, Case No. 2:20-cv-03775 (C.D. Cal.), available at https://
www.ftc.gov/system/files/documents/ cases/whole_leaf_complaint.pdf; Complaint, In re Ching,
Docket No. 9394 (FTC), available at https://www.ftc.gov/system/files/documents/cases
/d09394_administrative_part_iii_complaint.pdf.
18 Decision and Order, In re Ching, Docket No. 9394 (FTC), available at https://www.ftc.gov/
system/files/documents/ cases/d09394_whole_leaf_decision_and_order.pdf. The Federal case is
still pending.
19 FTC Press Release, As Scammers Leverage Pandemic Fears, FTC and Law Enforcement
Partners Crack Down on Deceptive Income Schemes Nationwide, https://www.ftc.gov/news-
events/press-releases/2020/12/scammers-leverage-pandemic-fears-ftc-law-enforcement-partners
(Dec. 14, 2020).
20 Copies of all of the FTC’s COVID–19 related warning letters are available here: https://
www.ftc.gov/coronavirus/enforcement/warning-letters.
21 FTC Press Release, FTC and SBA Warn Operator of SBA.com and Lead Generator Lendio
to Stop Potentially Misleading Coronavirus Relief Loan Marketing, https://www.ftc.gov/news-
events/press-releases/2020/05/ftc-sba-warn-operator-sbacom-lead-generator-lendio-stop (May 18,
2020); Press Release, FTC and SBA Warn Six Companies to Stop Potentially Misleading Mar-
keting Aimed at Small Businesses Seeking Coronavirus Relief Loans https://www.ftc.gov/news-
events/press-releases/2020/06/ftc-sba-warn-six-companies-stop-potentially-misleading-marketing
(June 24, 2020).
22 FTC Press Release, FTC and FCC Send Joint Letters to VoIP Service Providers Warning
against ‘Routing and Transmitting’ Illegal Coronavirus-related Robocalls, https://www.ftc.gov/
news-events/press-releases/2020/04/ftc-fcc-send-joint-letters-voip-service-providers-warning-
against (Apr. 3, 2020); FTC Press Release, FTC and FCC Send Joint Letters to Additional VoIP
Providers Warning against ‘Routing and Transmitting’ Illegal Coronavirus-related Robocalls,
https://www.ftc.gov/news-events/press-releases/2020/05/ftc-fcc-send-joint-letters-additional-
voip-providers-warning (May 20, 2020).

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and has been pleased to see that in the vast majority of cases, letter recipients re-
moved problematic claims quickly. The Commission is determined to pursue swift
enforcement action against noncompliant warning letter recipients.
The FTC also took enforcement actions to protect consumers’ privacy and data.23
Although the conduct in these matters occurred before the COVID–19 outbreak, the
relief in these orders seeks to protect consumers from digital harms that have been
exacerbated by the pandemic.24
In light of the eviction crisis caused by the pandemic, the Commission has
partnered with fellow enforcers at the Consumer Financial Protection Bureau
(CFPB) to focus on ensuring renters are not subjected to unlawful practices.25 The
Commission also will continue its efforts to ensure that tenant screening companies
comply with the Fair Credit Reporting Act, so that consumers who have gone or will
go through an eviction are not further stigmatized by incomplete or inaccurate infor-
mation as they seek new housing.26 The Commission is also monitoring and inves-
tigating conduct by multistate landlords that may violate the FTC Act or other laws
if they evict tenants in violation of national, state, or local eviction moratoriums,
as Acting Chairwoman Slaughter and Acting CFPB Director Uejio recently warned
in a joint statement.27
The Commission will remain vigilant in order to protect the public from harms
that stem directly and indirectly from the COVID–19 pandemic. The FTC is com-
mitted to tackling emerging threats, adjusting our strategies wherever necessary,
and working in close coordination with our partners.
b. Consumer Education and Outreach
The Commission has buttressed its law enforcement actions with consumer and
business education. Since the beginning of the pandemic, the FTC has worked ag-
gressively to dispel misinformation and confusion about the pandemic and related
issues that have fueled COVID-related scams. The Commission’s education cam-
paign has several facets: consumer and business alerts; a multi-media campaign;
substantive business guidance; and outreach with partners.
Early in the pandemic, the Commission began issuing alerts warning consumers
and the business community of COVID-related frauds. To date, the FTC has issued
more than 100 consumer and business alerts on a wide range of COVID-related top-
ics, including economic impact payments, health claims, online shopping, privacy in
a virtual environment, contact tracing, government imposter scams, job scams, and

23 See Complaint, United States v. HyperBeard, Inc., Case No. 3:20-cv-3683 (N.D. Cal.) (en-
forcement of the COPPA Rule against kids app developer for allegedly collecting personal infor-
mation from children under age 13 without obtaining parental consent), available at https://
www.ftc.gov/system/files/documents/cases/192_3109_hyperbeard_-_complaint.pdf; Complaint,
In re Zoom Video Comms., Inc., Docket No. C-4731 (FTC) (administrative action challenging
claims that gave consumers a false sense of security about how the company protected their in-
formation), available at https://www.ftc.gov/system/files/documents/cases/1923167zoomcom
plaint_0.pdf; Complaint, In re Flo Health, Inc., File No. 1923133 (FTC) (charges a developer of
a period and fertility-tracking app with allegedly sharing consumer health information with out-
side data analytics providers after promising that such information would be kept private),
available at https://www.ftc.gov/system/files/documents/cases/flo_health_complaint.pdf.
24 For example, the settlement in HyperBeard imposed a $4 million civil penalty requiring the
defendants to delete personal information the company illegally collected from children under
13. See Proposed Stipulated Order, United States v. HyperBeard, Inc., Case No. 3:20-cv-3683
(N.D. Cal.) available at https://www.ftc.gov/system/files/documents/cases/192_3109_hyper
beard_-_proposed_stipulated_order.pdf. In addition, as part of the settlement in Flo Health, Flo
must notify affected users about the disclosure of their personal information and instruct any
third party that received users’ health information to destroy that data. See Agreement Con-
taining Consent Order, In re Flo Health, Inc., File No. 1923133 (FTC) available at https://
www.ftc.gov/system/files/documents/cases/flo_health_order.pdf.
25 Press Release, FACT SHEET: The Biden-Harris Administration’s Multi-Agency Effort to
Support Renters and Landlords, https://www.whitehouse.gov/briefing-room/statements-re-
leases/2021/03/29/fact-sheet-the-biden-harris-administrations-multi-agency-effort-to-support-ren
ters-and-landlords/ (Mar. 29, 2021).
26 An example of the FTC’s efforts to protect tenants even before the pandemic is our case
against AppFolio, in which the defendant agreed to settle charges that it failed to follow reason-
able procedures to ensure the accuracy of criminal and eviction records in tenant screening re-
ports and reported obsolete information. See Complaint, United States v. AppFolio, Inc., Case
No. 1:20-cv-03563 (D.D.C. Dec. 8, 2020), available at https://www.ftc.gov/system/files/docu-
ments/cases/ecf_1_-_us_v_appfolio_complaint.pdf.
27 Joint Statement by FTC Acting Chairwoman Rebecca Kelly Slaughter and CFPB Acting Di-
rector Dave Uejio (Mar. 29, 2021), https://www.ftc.gov/news-events/press-releases/2021/03/
joint-statement-ftc-acting-chairwoman-rebecca-kelly-slaughter.

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misinformation.28 The FTC sends its alerts to more than 367,000 e-mail subscribers,
which include consumers, businesses, partners, and the media. In turn, many of
these subscribers share the information with their communities, greatly expanding
the reach of the agency’s message. The FTC has developed a multimedia campaign
with a dedicated website (ftc.gov/coronavirus) that contains a library of materials for
consumers and businesses in several different languages.
As the pandemic required many work, school, recreational, and social activities to
transition from in-person to online and virtual platforms, the shift to digital life pre-
sented new opportunities for bad actors to exploit. The Commission worked to pre-
vent this exploitation from occurring in the first instance. Accordingly, in April
2020, the Commission published guidance for education technology companies and
schools regarding their duties to protect children’s privacy and personal data—in-
cluding warnings of the parental consent requirements for data collection imposed
by the Children’s Online Privacy Protection Act (COPPA).29
Finally, FTC staff has engaged in national and local outreach with partners to
reach a variety of audiences, including older consumers, ethnic and community
media, housing organizations, re-entry groups, library patrons, and the military
community. The staff has used webinars, tele-town halls, Twitter chats, Facebook
Live events, and interviews with local and national media, to reach its audiences.
During the pandemic, FTC staff has participated in hundreds of virtual webinars,
presentations, and interviews—in English, Spanish, and Mandarin. The FTC also
has used new methods to reach people in economically and geographically diverse
communities who are targeted by COVID–19 scam artists. For example, the FTC
conducted a national radio media tour, mailed post cards to communities with low
broadband access, and delivered letters to community health professionals in 5,000
rural and urban health clinics to help people avoid COVID-related fraud.
As the pandemic has deepened, some new consumer financial issues have arisen
and others have been exacerbated. To ensure we are responding appropriately to the
issues consumers are facing, the FTC coordinated a series of virtual listen-and-learn
sessions across the country. Participants have included representatives from legal
services, social services, elder justice centers, departments of aging, housing coun-
selors, religious organizations, the Better Business Bureau, and the offices of State
Attorneys General. Based on input from stakeholders, the FTC is enhancing and ex-
panding its COVID–19 financial recovery and resiliency campaign, the centerpiece
of which will be a web-based toolkit available in multiple languages.
c. Data Collection
The FTC’s Consumer Sentinel Network collects millions of reports from the public
about fraud, identity theft, and other consumer problems, and makes them available
to thousands of law enforcement users across the country. In the weeks following
the first known cases of COVID–19 in the U.S., the FTC developed systems to track
and alert the public to shifts in Sentinel reporting. On ftc.gov/exploredata, the FTC
launched public dashboards showing aggregate Sentinel data on reports associated
with COVID–19 by age, type of fraud, and geographic location, with figures that are
updated daily. Since January 2020 and as of April 7, 2021, the FTC has received
more than 436,000 such reports, reflecting $399 million in fraud losses.30
The FTC’s monitoring and analyses of Sentinel data reveal increased fraud activ-
ity in 2020. Specifically, the number of fraud, identity theft, and other reports to
Sentinel (excluding Do Not Call) increased more than 45 percent over 2019 num-
bers, and reported losses from fraud grew from more than $1.8 billion in 2019 to
$3.3 billion in 2020.31 Being able to use Sentinel data to spot trends has helped the
FTC respond to emerging scams in real time—from bringing cases to halt fraudu-
lent activity, to targeting alerts warning of the newest fraud, to addressing specific

28 All of the FTC’s business and consumer alerts are available at https://www.ftc.gov/
coronavirus.
29 COPPA Guidance for Ed Tech Companies and Schools during the Coronavirus, https://
www.ftc.gov/news-events/blogs/business-blog/2020/04/coppa-guidance-ed-tech-companies-
schools-during-coronavirus (Apr. 9, 2020).
30 The figures reflect reports in Sentinel that specifically mention words related to the pan-
demic, such as COVID, stimulus, N95 and related terms. To provide the most relevant results,
some subcategories are excluded. For more information, visit https://public.tableau.com/pro-
file/federal.trade.commission#!/vizhome/COVID-19andStimulusReports/Map.
31 Some of the increase in complaints for 2020 is due to a new large data contributor, namely
the FBI’s Internet Crime Complaint Center, which added about 200,000 complaints in 2020. In
addition, the FTC launched a re-designed website to capture consumer reports more easily at
the end of October 2020. Nevertheless, the rise in reports is highly significant. From FTC’s
websites and call center alone, the surge in reports was about 970,000 in 2020, and many Sen-
tinel data contributors also experienced an increase in complaint volume in 2020.

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threats, such as the proliferation of identity theft related to unemployment insur-
ance benefits.32
Ensuring that the experiences of all consumers are represented in Sentinel is
critically important to the agency’s work. To expand accessibility, the FTC launched
a new modernized reporting website, ReportFraud.ftc.gov, in October 2020. The up-
dated site includes a COVID–19 banner, providing an easy way for consumers to
report COVID-related issues. And, this month, the FTC launched the Community
Advocate Center, which is part of the agency’s ongoing work to collaborate with
legal services organizations to learn about consumer protection needs and problems
affecting the lower-income communities they serve. The Center provides a new way
for organizations that provide free and low-cost legal services to report fraud and
other illegal business practices directly to the FTC on behalf of their clients.
III. CONCLUSION
Throughout the past year, the Commission has worked tirelessly to stop bad ac-
tors from exploiting the pandemic at the public’s expense. But the Commission’s
work is far from over. COVID-related scams are likely to persist as the country con-
tinues to grapple with this pandemic. Combatting these scams will remain a top pri-
ority for the Commission, and we will continue to use every tool we have to stop
this predatory behavior, including seeking civil penalties under the newly enacted
COVID–19 Consumer Protection Act, where appropriate.33
We look forward to continuing to work with the Subcommittee and Congress, and
I am happy to answer your questions.

Senator BLUMENTHAL. Thanks very much, Mr. Kaufman.
I’d like to turn now to William Kovacic, who joins us remotely.
STATEMENT OF WILLIAM E. KOVACIC, GLOBAL COMPETITION
PROFESSOR OF LAW AND POLICY, PROFESSOR OF LAW,
DIRECTOR, COMPETITION LAW CENTER,
THE GEORGE WASHINGTON UNIVERSITY LAW SCHOOL
Mr. KOVACIC. Thank you very much, Chairman Blumenthal. My
thanks also to Ranking Member Blackburn and the Subcommittee
Members. I’m most grateful for the opportunity to participate in
these important proceedings.
The COVID pandemic is the latest grim demonstration that ca-
tastrophe often inspires serious fraud, and I’d like to discuss sev-
eral ways that Congress and the FTC, the states, and other law en-
forcement bodies and their partners can respond to what has been
a merciless stress test on the ability of public administration to re-
spond to this type of crisis.
In offering suggestions, I immediately acknowledge the admi-
rable efforts already undertaken by the Congress, the FTC, the
states and their partners to protect Americans from exploitation.
My first suggestion echoes the comment that the Chairman made
in opening the proceedings and that is my belief that serious fraud
will only be deterred when we bring the full range of our criminal
enforcement powers to bear on the wrong-doers.
I think the Chair described accurately the state of mind of the
wrong-doers here. They have sinister skill. They have utter craven-
ness, and I don’t think they will respond fully if the worst that can
32 Identity thieves targeted unemployment insurance benefits in record numbers in 2020. Of
the identity theft reports received in 2020, over 400,000 came from people who said their infor-
mation was misused to apply for a government benefit, and the overwhelming majority of these
related to unemployment insurance. This represents a staggering increase of nearly 3000 per-
cent from 2019. These reports were overwhelmingly about fraudulently obtained unemployment
benefits claims, a problem that has proliferated during the pandemic. Working in cooperation
with the U.S. Department of Justice Unemployment Insurance Fraud Task Force, the FTC
launched www.IdentityTheft.gov/unemploymentinsurance to provide information to the public on
where to report and how consumers can protect their credit.
33 Pub. L. No. 116–260, 134 Stat. 1182, Division FF, Title XIV, § 1401(b)(1).

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happen to them is that we take the money away from them and
return it to the Treasury or return it to consumers.
In many instances, they squander the assets they gained improp-
erly and they hide the funds that they have. I think the only way
to deter their misconduct effectively is to take away their freedom
through criminal enforcement.
Now as the Chair said, the FTC already has a platform, the
Criminal Liaison Unit, to encourage and work with criminal en-
forcement authorities to use their powers on behalf of consumers
by bringing criminal sanctions to bear on the wrong-doers.
I think an unmistakable lesson of this recent experience is that
augmenting that capability, increasing the cooperation with crimi-
nal enforcement authorities, with the FTC playing a crucial role in
helping set up cases, identify areas for examination, in many in-
stances to assist in compiling a record that will be useful in crimi-
nal prosecution is the only way to bring our fullest and most pow-
erful deterrent to bear on these individuals.
Civil enforcement is an important part of the mix, let there be
no doubt, but I think our first and foremost strategy in many re-
spects has to be dealing with serious criminals with serious crimi-
nal enforcement process.
My second suggestion deals with themes that Daniel and the
Chair have raised already and that is we must restore the ability
of the Federal Trade Commission to go directly to District Court
and to receive restitution or to achieve disgorgement, restitution for
victims, disgorgement of other assets to place in the Treasury.
These measures do have important deterrent value and they are
the best tool that the FTC has at its disposal to achieve compensa-
tion for victims and this must be a priority of legislative drafting
in the months to come.
My third suggestion is a dramatic expansion of funding and re-
sources for the FTC, along with some ideas about how to spend it.
Last fall before this committee and proceedings convened by Sen-
ator Wicker, I suggested that a threefold increase in the budget of
the FTC would be appropriate to put the Commission in a position
to do the work that it must do and that it was important not sim-
ply to add to the size of the professional staff. The Commission is
blessed with wonderful professionals and you have one of them
seated before you with Daniel Kaufman.
But I think it is important to consider bringing the salary levels
up to the level, for example, that the Consumer Financial Protec-
tion Bureau enjoyed, roughly a 20 percent boost, so that we can re-
cruit the best and, more important, to keep them.
What would I do with the salaries? I would enhance what are
presently the best data collection and consumer education systems
in the world. Those are the FTCs. I would use the money to en-
hance Sentinel, to expand the consumer and business education
projects that the FTC has underway. I would invest more in build-
ing the data analytics capability that the agency already has, to
use the information that it has, and to apply it more effectively,
and I would use the competition and markets authority regime, the
data unit there, as a model for doing this.

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And, finally, I would indeed use the money to expand cooperation
with state partners, with state and local governments to enforce
more effectively.
I welcome your questions and those of other committee members.
Thank you.
[The prepared statement of Mr. Kovacic follows:]

PREPARED STATEMENT OF WILLIAM E. KOVACIC 1
Introduction
I thank the Subcommittee and its leadership for the invitation to participate in
these proceedings.
The COVID–19 crisis has provided the occasion for the latest iteration of a grim
phenomenon in human experience. Calamity creates conditions in which serious
fraud flourishes. Amid catastrophe occasioned by natural disaster, economic col-
lapse, or disease, craven individuals and organizations prey upon victims with false
promises to alleviate misery. The desperation of victims to gain relief renders them
especially vulnerable to malicious conduct.
The COVID Pandemic has administered a merciless stress test to our government
institutions. Our public institutions have responded admirably to this test. Congress
has strived to create new capabilities to challenge and deter serious fraud. The
adoption of the COVID–19 Consumer Protection Act is but one illustration.2 The
Federal Trade Commission (FTC) and its partners at the state and local level have
confronted COVID-related fraud with extraordinary dedication. The commitment,
drive, and ingenuity of these institutions is inspiring to behold. With their offices
shuttered and staff working remotely, our consumer protection agencies have de-
vised creative methods to challenge fraudulent, oppressive commercial conduct that
has follows in COVID–19’s wake.
The pandemic stress test also has illuminated weaknesses in the framework
through which the United States and other countries address supplier misconduct
amid crisis conditions. My testimony derives lessons from this experience to suggest
how Congress and the regulatory community at home and abroad might improve the
existing consumer protection framework. I also identify how the regulators since
early 2000 have strengthened operational techniques and devised new approaches
for the exercise law enforcement and related policy duties. I recommend that agen-
cies make recent, positive policymaking innovations lasting elements of agency prac-
tice.
Most of my suggestions deal with authority that the FTC can apply directly, or
could apply, with an enhanced mandate from Congress. I offer an initial cautionary
note about the effectiveness of the civil enforcement tools at the FTC’s disposal. I
believe the only way to deter the most serious fraudulent schemes we have observed
is to subject violators to criminal punishment. Severe civil sanctions, including the
imposition of monetary penalties and orders mandating restitution or disgorgement,
are unlikely to deter truly corrupt individuals or malign enterprises, which often are
adept at hiding or squandering assets to render them judgment proof in civil ac-
tions.
The FTC has a Criminal Liaison Unit which works with criminal prosecutors at
the federal, state, and local levels to assist in the development of criminal cases
against participants in serious fraud.3 I see an urgent priority to be the expansion
of this effort to ensure that a greater number of malicious behaviors uncovered dur-
ing the COVID–19 crisis, and in other settings, be punished through criminal pro-
ceedings. I doubt that we can approach desired levels of deterrence if potential
wrongdoers do not face a growing possibility that fraud will cost them their freedom.
My testimony is guided partly by experience in serving as a Non-executive Direc-
tor of the United Kingdom’s Competition and Markets Authority (CMA). In today’s
proceedings I do not speak on CMA’s behalf, but my comments are informed by the
CMA’s work in addressing problems related to COVID–19.

1 Global Competition Professor of Law and Policy, George Washington University Law School;
Visiting Professor, King’s College London; Non-Executive Director, UK Competition and Markets
Authority. I thank Robert Anderson, Anna Caroline Müller, Will Hayter, Alison Jones, Antonella
Salguiero, and Nadhya Sporysheva for useful comments about topics concerning my testimony.
The views expressed here are mine only. Contact: wkovacic@law.gwu.edu.
2 Pub. L. No. 116–260, 134 Stat. 1182, Division FF, Title XIV, § 1401(b)(1).
3 The functions of this group are described in Federal Trade Commission, Criminal Liaison
Unit, at https://www.ftc.gov/enforcement/criminal-liaison-unit.

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Filling Gaps and Correcting Vulnerabilities: Priorities for New Legislation
or Deliberations that Could Yield New Legislation
In the following areas, new legislation would improve the effectiveness of the U.S.
consumer protection regime.
Federal Trade Commission Remedial Powers
Last Friday, the Supreme Court ruled that the FTC lacks authority under Section
1(b) of the Federal Trade Commission Act to obtain restitution and similar forms
of equitable relief in antitrust and consumer protection cases.4 The ability to obtain
equitable monetary relief (restitution and disgorgement) in actions filed directly in
Federal district court is vital element of the FTC’s anti-fraud program. I endorse
efforts by Congress to amend the FTC Act to give the FTC express authority to ob-
tain the full range of equitable remedies, including monetary recoveries, for con-
sumer protection violations. The ability to deprive wrongdoers of the financial gains
from misconduct provides compensation for victims and increases deterrence by di-
minishing the returns to fraud and other forms of oppressive behavior.
I also suggest that Congress conduct deliberations concerning the Commission’s
ability to recover monetary remedies for antitrust violations. I believe there is a use-
ful role for civil monetary relief in FTC antitrust enforcement, and I endorse the
approach the Commission set out in a 2003 policy statement to seek such remedies
in ‘‘exceptional cases’’ involving clear violations of the antitrust laws.5 The consider-
ation of equitable monetary relief as a remedy in FTC actions filed in Federal dis-
trict court should be part of a larger discussion about what Congress believes to be
the agency’s role in developing competition law standards through, respectively, ad-
ministrative adjudication and litigation in the Federal district courts.
Another enhancement of the FTC’s remedial authority I recommend for the Com-
mittee’s consideration would be to establish a U.S. replica of the markets regime
now implemented in the United Kingdom by the Competition and Markets Author-
ity.6 Part 4 of the Enterprise Act 2002 7 enables the CMA to investigate markets
where it appears that the structure of the market or the conduct of suppliers or cus-
tomers in the market is harming competition and, where problems are identified,
to impose remedies (including price caps) and make proposals to legislators to cor-
rect observed problems. This would enable to FTC to study sectoral or economy-wide
phenomena and to order remedies regardless of whether the conditions or practices
in question violate existing consumer protection laws.
Federal Trade Commission Jurisdictional Limitations
Congress should eliminate statutory exemptions that deny the FTC jurisdiction
over common carriers, not-for-profit institutions, the business of insurance, and
banks.8 Most of these jurisdictional limitations date back to the agency’s creation.
Some exemptions may have made sense when established; the economy and the af-
fected fields of activity were much different. Today, the exemptions are embar-
rassing anachronisms that diminish the FTC’s capability to perform the competition
policy role that Congress set out in 1914 and to carry out the consumer protection
and privacy responsibilities that now are key elements of the agency’s law enforce-
ment portfolio. On many occasions over the past two decades, the FTC has pled with
the Congress to revisit and eliminate—or at least curtail—the jurisdictional exemp-
tions.
Federal Trade Commission Budget and Compensation Levels for Employees
There is a grave mismatch between the duties Congress has assigned the FTC
and the resources it has given the agency to carry out its mandate. There is a seri-
ous need to raise the FTC’s budget, but not simply to build a larger staff by hiring
more people. Reforms to the Federal compensation system are necessary to attract
and retain a larger number of elite personnel. I do not see how the FTC or many
other public agencies can recruit and retain necessary personnel without a signifi-
cant increase in the salaries paid to managers and staff.

4 AMG Capital Management, LLC. v. Federal Trade Commission, No. 19–508 (S.Ct., Apr. 22,
2021).
5 Federal Trade Commission, Policy Statement on Monetary Equitable Remedies in Competi-
tion Cases, 68 Fed. Reg. 45821 (2003). The Commission withdrew this policy statement in 2012.
Federal Trade Commission, Withdrawal of the Commission Policy Statement on Monetary Equi-
table Remedies in Competition Cases, 77 Fed. Reg. 47071 (2012).
6 William E. Kovacic, Market structure and market studies, in COMPETITION LAW AND ECONOM-
ICS 30 (Jay Pil Choi, Wonhyuk Lim & Sang-Hyop Lee eds., 2020).
7 Enterprise Act 200, c.40, Section 4 (‘‘Market Investigations’’).
8 See David A Hyman & William E. Kovacic, Implementing Privacy Policy: Who Should Do
What?, 29 FORD. INTELL. PROP. MEDIA & ENT. L.J. 1119, 1133 (2019).

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15
Consider two possibilities for compensation reform. The first is to align FTC sala-
ries with the highest scale paid to the various U.S. financial service regulators. One
model would be the compensation scale used to pay employees of the banking regu-
latory agencies; the salary scale for these bodies exceeds the General Schedule (GS)
Federal civil service wage scale by roughly twenty percent.9
In adopting the Dodd-Frank Wall Street Reform and Consumer Protection Act in
2010,10 Congress concluded that the importance of the mission of the new Consumer
Financial Protection Bureau (CFPB) warranted higher salaries for the agency’s per-
sonnel. If the higher salary scale made sense for the CFPB, I see no good reason
why a more generous compensation schedule is not appropriate for what is the Na-
tion’s leading consumer protection agency (and its leading Federal data protection
authority).11
A second, more ambitious alternative would be to triple the FTC’s existing budget
of about $330 million per year and use the increase mainly to raise salaries and
partly to add more employees. This experiment might be carried out for a decade
to test whether a major hike in pay would increase the agency’s ability to recruit
the best talent, retain the talent for a significant time, and apply that talent with
greater success in a program that involves prosecuting numerous ambitious cases
and devising other significant policy initiatives.
A major increase in compensation, either by adopting the CFPB model or trying
our my more ambitious proposal, is a crucial test of our national commitment to im-
prove the foundations for effective consumer protection enforcement. The nation
should spend what it takes to get the best possible personnel to run the difficult
cases (and carry out other measures, such as the promulgation of trade regulation
rules) that will be the pillars of a new, expanded enforcement program. Such steps
will become even more important if new political leadership seeks to close the re-
volving door, which has operated as a mechanism to encourage attorneys and econo-
mists to accept lower salaries in Federal service in the expectation of receiving
much higher compensation in the private sector at a later time.
Federal Trade Commission Administrative Process
I propose two legislative changes to the FTC’s administrative framework to enable
the Commission to carry out the full range of its duties, including consumer protec-
tion, more effectively. The first is to relax the limits that the Government in the
Sunshine Act 12 imposes on the ability of commissioners to deliberate together pri-
vately to discuss matters of strategy and tactics. Among other consequences, the
Sunshine Act severely limits the ability of a quorum of commissioners to deliberate
over matters of agency policy except in meetings open to the public.13 Policy plan-
ning, strategy-setting, and case selection functions cannot be executed at the highest
level of effectiveness without this reform. A central reason to entrust governance to
a multimember body, rather than to govern an agency with a single executive, is
to gain the benefits of deliberation. Collective decision making, and the informal col-
laborative discussions that surround it, are deemed useful to improve the agency’s
ability to make wise choices when setting priorities, formulate strategies for litiga-
tion and nonlitigation programs, and selecting projects. As now written and inter-
preted, the Sunshine Act severely reduces the FTC’s ability to realize the theoretical
advantages of collective governance. I know of no jurisdiction abroad that relies on
an administrative commission to implement consumer protection law and encum-
bers the enforcement with so many restrictions on collegial decision making.14 In

9 See Paul H. Kupiec, The Money in Banking: Comparing Salaries of Bank and Bank Regu-
latory Employees (American Enterprise Institute, April 2014), https://www.aei.org/wp-content/
uploads/2014/04/-the-money-in-banking-comparing-salaries-of-bank-and-banking-regulatory-
employees_17170372690.pdf.
10 Pub. L. No. 111–203, 124 Stat. 1376 (2010).
11 As a member of the FTC, I observed firsthand how the disparity in salaries between the
CFPB and the FTC resulted in a significant migration after 2010 of the Commission’s elite con-
sumer protection attorneys and economists to the CFPB. Many of these individuals were major
contributors to the FTC’s consumer protection programs because they combined outstanding in-
tellectual skills with decades of experience (much of it in middle-level and senior management
positions) at the Commission. It was impossible to replace them with individuals of comparable
skill and experience, and the FTC’s performance suffered as a consequence.
12 P.L. 94–409, 90 Stat. 1241 (1976).
13 The Sunshine Act and its requirements are analyzed in Reeve T. Bull, The Government in
the Sunshine Act in the 21st Century (Mar. 10, 2014) (report prepared for the Administrative
Conference of the United States), https://acus.gov/report/final-sunshine-act-report.
14 My experience as a non-executive director of the CMA has highlighted how the FTC is
largely foreclosed from using policy planning and prioritization techniques that are commonly
employed to great advantage in other jurisdictions.

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numerous conversations, officials with consumer protection agencies in other juris-
dictions with multi-member commissions express disbelief that the United States
created an administrative mechanism with enormous potential and then chose to
undermine its implementation so severely.
To serve the accountability and transparency aims that motivated the adoption
of the Sunshine Act, Congress could press the FTC to use other disclosure tech-
niques. Here, as well, experience in foreign jurisdiction suggests a superior alter-
native path. A number of jurisdictions achieve desired transparency through meas-
ures that require their competition authorities to publish an annual statement of
priorities, to issue their prioritization criteria, to provide explanations of the deci-
sion to prosecute and not to prosecute in individual cases, and to issue annual re-
ports that discuss the agency’s progress in realizing its goals.15 In many instances,
documents that set out priorities, case selection criteria, and results achieved are
issued first in draft form for public comment. In addition to these measures, agency
officials make regular appearances before legislative committees and in public fora
to discuss the work of their institutions. These techniques can be supplemented with
a program of ex post evaluation that tests, through actual experience, the assump-
tions that guided agency decisions in specific cases and supplies an additional basis
for public debate about the agency’s policymaking. Experience with the disclosure
mechanisms described here suggests that other jurisdictions achieve informative
public disclosure, and rigorous agency accountability, without the limits imposed by
the Sunshine Act.
A second legislative measure is to enable the FTC to recruit and hire competition
and consumer protection specialists to serve as administrative law judges.16 The ad-
ministrative adjudication of cases was a crucial basis for the establishment of the
Commission in 1914. Several pillars of the institution were designed solely, or prin-
cipally, to support administrative adjudication: the multi-member governance con-
figuration (with the board performing the functions of deciding to prosecute and of
hearing appeals from administrative cases), the broad, scalable mandate of Section
5 of the FTC Act,17 and special information gathering powers to inform the develop-
ment of legal standards to meet evolving commercial conditions. All of these charac-
teristics put administrative adjudication at the center of the agency’s work. There
was little point in Congress designing the agency as it did except to create a plat-
form for administrative adjudication and norms creation.
The proceedings before the administrative law judge (ALJ) are the vital first step
of the FTC’s administrative process. The administrative hearing collects and ana-
lyzes evidence and applies the law. It is the foundation for subsequent deliberation
by the Commission sitting as a plenum in appeals. At present, the Commission has
no ability to insist that ALJ appointees have significant prior experience in competi-
tion law or consumer protection law. The ALJ selection process is controlled by gov-
ernment-wide processes that accord no weight to the FTC’s institutional consider-
ations. Congress can correct this deficiency by amending the government’s ALJ se-
lection process to use competition and consumer protection expertise as a key cri-
terion in the choice of FTC ALJs.
Priorities for Future Legislative Oversight and Policy Discussion
In this section I identify possible focal points for congressional oversight and pol-
icy discussions.
Preserving and Extending Recent Operational Innovation and Identifying Other
Areas to Improve FTC Capacity
I suggest that the Subcommittee convene formal proceedings or conduct informal
discussions with the FTC to ask the agency to describe what new measures it de-
vised to deal with the COVID crisis and how it adapted existing procedures and pol-
icy tools to detect and attack fraudulent schemes and to provide information to con-
sumers. It appears that the Commission used a number of innovative methods to
provide additional information to consumers and to expedite, as much as possible,
the investigations and cases involving fraud. The Subcommittee might engage with

15 For example, it is sensible for the FTC to emulate the practice of many foreign authorities
issue closing statements after the agency has conducted an investigation but decided not to in-
tervene. The triggering event in the United States might be matters in which the agency has
used compulsory process to conduct an inquiry.
16 See William E. Kovacic, Chairman, U.S. Federal Trade Commission, THE FEDERAL TRADE
COMMISSION AT 100: INTO OUR SECOND CENTURY 42–45 (2009)
17 As amended by the Wheeler-Lea Act, Section 5 of the Federal Trade Commission Act pro-
hibits ‘‘unfair methods of competition’’ and proscribes ‘‘unfair or deceptive acts or practices.’’ 15
U.S.C. § 45.

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the Commission in an ongoing conversation about what worked well and ought to
be continued in more normal times.
The COVID stress test undoubtedly identified for the Commission areas in which
greater expenditures and changes to operations are necessary for the future. This
might be an ideal moment for the Subcommittee and the Commission to consider
what type of capital investment might be needed to upgrade the agency’s Consumer
Sentinel system or the create net information networks to join up the FTC more
closely with other public agencies with consumer protection duties and with civic
bodies that monitor problems affecting consumers.
This would also be an appropriate time for a stocktaking exercise in which the
Subcommittee and Commission reflect upon ways that, based on the experience of
the past year, the pandemic has changed the commercial environment for the longer
term—in some instances, creating conditions that pose greater hazards for con-
sumers but in other cases inspiring commercial innovations that benefit consumers.
In short, the Subcommittee might use its policy making deliberations to assess, with
the FTC and other consumer protection bodies, how COVID has altered the commer-
cial landscape in ways that dictate adjustments in consumer protection policy.
To my view, the FTC has the world’s best consumer protection complaint database
(the Consumer Sentinel Network) and the world’s best program of consumer and
business education. During the COVID–19 pandemic, the Commission has made ex-
cellent, creative use of these tools.
The Consumer Sentinel Network and the FTC’s consumer and business education
programs are the product of decades of farsighted investments in building a superior
team of professionals and in creating an administrative infrastructure to support
them. The formation of these capabilities is a genuine success story in modern pub-
lic administration. As the Nation emerges from the harshest period of the pandemic
and returns to greater health and economic prosperity, there is an opportunity to
use recent experience to consider how these efforts might be enhanced. The FTC
and its many partners no doubt have learned about ways in which these systems
can be improved. The Senate Commerce Committee might convene proceedings to
discuss what these enhancements might be and to identify the resources needed to
accomplish them.
I suspect one significant focal point for an enhancement of the FTC’s capacity will
be to strengthen its data analytics team. International experience suggests a way
forward on this score. One of the most important policy innovations undertaken by
the UK’s CMA in recent years has been the creation of a Data, Technology and Ana-
lytics (DaTA) unit. Formed in 2018, the group now numbers over forty professionals,
many with professional training and experience in fields such as computer science
and engineering. The CMA formed the DaTA group out of recognition that a major
enhancement of its scientific capabilities was necessary to enable the agency to meet
the challenges, in its capacity as a competition agency and a consumer protection
body, presented by developments in highly dynamic, high technology commercial
sectors. It would no longer be possible to rely chiefly, or exclusively, on attorneys
and economists to staff relevant projects.
The CMA DaTA team has proved to be an extremely valuable asset during the
pandemic. Among other contributions, the DaTA unit played a vital role in the anal-
ysis of consumer complaints related to COVID. The unit’s analytics group enabled
the CMA to identify trends almost in real time and to publish weekly updates about
trends in complaints. The results of the data analysis, in turn, enabled the CMA
to focus its law enforcement efforts and related publicity work immediately upon
areas of greatest urgency and to give valuable guidance (informed by reliable data)
to other government bodies. I urge the Subcommittee to encourage the FTC to de-
velop a comparable capability and to urge Congress to fund its development.
Larger questions about configuration of U.S. Consumer Protection System
The remedies issues mentioned at the beginning of my testimony are only one set
of developments that, I expect, will force a reconsideration of the institutional ar-
rangements through which the Federal government and its state and local partners
implement consumer protection policy. We may see in the next year the adoption
of long-awaited national privacy legislation. Should this come to pass, Congress
must choose a mechanism for its enforcement. Should it give the new mandate to
the FTC, create a standalone Federal privacy agency, or devise other enforcement
and policymaking frameworks? Whatever choice is made will have a major impact
on the future operations of the FTC.
We also may see the courts revisit the basic question of whether the president
may remove the members of the independent Federal regulatory agencies without
cause. My own interpretation of recent cases, such as the Supreme Court’s decision

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18
in 2020 in Seila Law LLC v. Consumer Financial Protection Bureau,18 is that the
Court may be minded to come back on the issue of the removal power in future
cases and, perhaps, to alter fundamentally a key pillar of the modern regulatory
state. There have been rumblings in the lower courts, as well, in the form of opin-
ions that openly express doubts about the soundness of the FTC’s administrative ad-
judication system.19
All of these developments suggest that we may be on the threshold of a basic reas-
sessment, driven by the rulings of the Federal courts, about the proper structure
and allocation of authority to the regulatory bodies on which Congress has relied
heavily for over a century to regulate commerce and protect consumers. This seems
an increasingly urgent topic for consideration by the Subcommittee and agencies,
such as the FTC, subject to its oversight.
FTC Rulemaking Authority
This is an ideal time for the Subcommittee to reflect upon what adjustments it
might wish to make, beyond measures already adopted recently in COVID-related
legislation, to clarify and augment the FTC’s powers to issue trade regulation rules
governing consumer protection and competition matters. In hearings and other pol-
icy deliberations, the Subcommittee might consider what mix of instruments it wish-
es the Commission to exercise (and what remedies to apply) in the future: the Mag-
nuson-Moss rulemaking process, more generic Administrative Procedure Act rule-
making authority, or sector-specific grants of rulemaking powers. In doing so, I
think it is sensible for the Subcommittee to be guided by the awareness that the
Federal judiciary today is unlikely to embrace statutory interpretation approaches
that courts have used in the past to infer broad grants of rulemaking authority to
the Commission for various purposes.20 In my view, this reassessment grows more
urgent in light of the Supreme Court’s decision last Friday in the AMG Capital
Management case, mentioned above.
Interagency Cooperation
The U.S. consumer protection regime is a decentralized system that distributes
policymaking and law enforcement power across numerous agencies at the federal,
state, and local levels. Federal statutes coexist with myriad state laws mandates,
some with powerful enforcement mechanisms.
The extraordinary decentralization and multiplicity of enforcement mechanisms
supply valuable possibilities for experimentation and provide safeguards in case any
single enforcement agent is disabled (e.g., due to capture, resource austerity, or cor-
ruption).21 Among public agencies, there is also the possibility that Federal and
state government institutions, while preserving the benefits of experimentation and
redundancy, could improve performance through cooperation that allows them to
perform tasks collectively that each could accomplish with great difficulty, or not at
all, if they act in isolation. Congress should use its oversight powers to encourage
the FTC and the states to adopt collaborative approaches that preserve the multi-
plicity of actors in the existing U.S. regime but also promise to improve the perform-
ance of the entire system through better inter-agency cooperation—to integrate op-
erations more fully ‘‘by contract’’ rather than a formal consolidation of functions in
a smaller number of institutions.
For models of successful interagency cooperation, one might study the successful
policy integration that has taken place through the work of the United Kingdom
Competition Network and the European Competition Network. In both examples
one can see the mix of organizational structures and personal leadership that en-
abled agencies collectively to accomplish policy results that would have been unat-
tainable through the work of single agencies operating in isolation. The United
States has no equivalent to these institutions, which have served valuable policy for-
mation and coordination functions abroad. The development by U.S. consumer pro-
tection bodies of such networks could provide a useful way to replicate the success
achieved in other jurisdictions. Other useful measures would include the creation
of a regular program of secondments in which the leading agencies in the United
States—federal and state bodies, alike—would swap personnel to build familiarity

18 591 U.S. ___ (2020).
19 Axon Enterprise v. Federal Trade Commission, 2021 U.S. App. LEXIS 2374 (9th Cir.,
Jan. 28, 2021).
20 One case whose analytical foundations might be seen by some judges as worthy of a rethink
is National Petroleum Refiners Ass’n v. Federal Trade Commission, 482 F.2d 632 (D.C. Cir.
1973).
21 David A. Hyman and William E. Kovacic, State Enforcement in a Polycentric World, 2019
B.Y.U. L REV. 1447.

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with the partner institutions and help create the trust and understanding that im-
prove cooperation.
The Subcommittee’s oversight activities can be a valuable means for guiding the
FTC and other consumer protection bodies agencies to cooperate more extensively
in ways that pool experience and knowledge and enable Federal and state officials
to get the greatest value from their consumer protection expenditures and respond
more quickly and effectively to fraud and patterns of misconduct. The Subcommittee
might help foster the expansion and formalization of interagency contacts through
secondments, the formation of working groups, and the creation of U.S. equivalents
of the ECN and the UKCN.
Promoting agency efforts to expand their existing impact evaluation programs—
especially common evaluation exercises performed by federal, state, and local agen-
cies, could be one part of a broader effort by Congress to support efforts to evaluate
the effects of past antitrust cases—especially those with significance for the digital
marketplace. Committee hearings could provide a regular forum in which agency of-
ficials, practitioners, and academics examine the effects of completed matters. Com-
mittees could cooperate with universities and think tanks to hold programs that
study past experience. One step in this direction might be for consumer protection
agencies to convene an event that focuses on lessons learned for consumer protec-
tion policy from the pandemic experience.
I also would note that the during the crisis the FTC has formed closer alliances
with its competition and consumer protection agencies overseas. By reason of des-
perate necessity, the FTC and its foreign counterparts have recognized, in a highly
practical way, the benefits that can flow from pooling knowledge and accounting
from policy experiments taking place in real time in other jurisdictions. I expect a
favorable result of the crisis to be that the habit of deeper cooperation born out of
the crisis will persist and improve policymaking in the future.

Senator BLUMENTHAL. Thanks very much, Professor Kovacic.
And now Kevin Rhodes.
STATEMENT OF KEVIN H. RHODES, SENIOR VICE PRESIDENT
AND DEPUTY GENERAL COUNSEL, 3M COMPANY
Mr. RHODES. Chair Blumenthal, Ranking Member Blackburn,
and Distinguished Members of the Subcommittee, thank you very
much for the opportunity to testify today.
3M appreciates your focus on consumer protection, including crit-
ical issues of PPE supply chain integrity and public health and
safety.
In my role as Senior Vice President and Deputy General Counsel
with 3M, I am proud to be a leader of 3M’s ongoing efforts to ad-
dress fraud, counterfeiting, and price gouging of PPE products dur-
ing the COVID–19 pandemic, most notably 3M’s N95 respirators.
Hundreds of 3Mers around the company and across the world
have joined together to help stop pandemic profiteers seeking to
take advantage of the tremendous demand for our products in un-
lawful ways.
Our efforts are designed to help healthcare workers, first re-
sponders, and others on the front lines of the fight against COVID–
19 get the genuine 3M N95 respirators they need and deserve at
a fair price.
Our actions against PPE scams are just a part of 3M’s overall
pandemic response. We are committed to the safety of our employ-
ees, healthcare workers, and the public. We are meeting these com-
mitments by responding to the pandemic from all angles.
We have increased our global manufacturing of PPE products to
unprecedented levels, making nearly four times as many 3M N95
respirators than before the pandemic. In the U.S. alone, we are
now producing more than 95 million N95 respirators every month,
thanks to ramped-up production at our facilities in Aberdeen,

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South Dakota, and Dowling, Nebraska, and we are partnering with
Federal, state, and local governments to help ensure our products
are getting to where they are needed the most.
With respect to our efforts to address PPE scams, we have pub-
lished a wide variety of online resources and tips to help the public
spot and avoid fraud, counterfeits, and price gouging.
We have created and staffed hotlines and web intake forms
around the world to help the public identify authentic 3M products
from 3M authorized distributors and to report cases of suspected
wrong-doing. Since the beginning of the pandemic, we have proc-
essed more than 13,800 of those reports. We have referred thou-
sands of them to law enforcement and government agencies, and
the effectiveness of the investigations and actions those law en-
forcement authorities and agencies have taken is a key lesson
learned in our view.
We’ve also taken legal action directly against wrong-doers. 3M
has filed 33 lawsuits in courts across the country. We have won
temporary restraining orders, preliminary injunctions, and final
judgments in multiple cases, putting a stop to the defendants’ un-
lawful conduct. In those cases where 3M has recovered monetary
damages, we are donating all of those recoveries to COVID–19-re-
lated charities.
We’re also prioritizing the stopping of online scams, as Chair
Blumenthal mentioned in his opening comments. Those have been
a key focus of our activities, as well. We have partnered with e-
commerce and technology companies to remove tens of thousands
of false or deceptive e-commerce listings, social media posts, and
websites.
3M’s partnerships with law enforcement and Customs authorities
have been especially important in addressing the problem of coun-
terfeits. In February, the Department of Homeland Security an-
nounced that its special agents had seized 11 million counterfeit
masks in operations conducted in five states. That investigation
began with a suspected counterfeit report submitted to 3M by a
concerned respirator buyer and that example’s hardly unique.
Since the beginning of the pandemic raised by law enforcement,
seizes by Customs authorities around the world and other actions
have removed more than 38 million counterfeit respirators from the
market before they can endanger unsuspecting wearers.
3M hopes that by continuing to share our experience, we can
help in educating the public and in protecting it from further
scams.
In my written testimony, I offer a number of lessons learned and
suggestions in that regard, highlighting the effectiveness of private/
public partnerships, of consumer education, and the need for pan-
demic preparedness to include specific plans and dedicated re-
sources for law enforcement and government agencies to respond
quickly and effectively to the fraud, counterfeiting, and price
gouging that unfortunately does take place when demand for PPE
so far exceeds supply.
I thank you again for the opportunity to offer these views today.
3M is very proud of our hard work as a leading supplier of N95
respirators and other PPE that are so important to the fight
against COVID–19, and of our commitment to continuing to help

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prevent fraud, counterfeiting, and price gouging before it starts and
to stop it where it is occurring.
I will be pleased to answer your questions or to supply additional
information for the record. Thank you very much.
[The prepared statement of Mr. Rhodes follows:]

PREPARED STATEMENT OF KEVIN H. RHODES, SENIOR VICE PRESIDENT AND DEPUTY
GENERAL COUNSEL, 3M COMPANY
Chair Blumenthal, Ranking Member Blackburn, and Distinguished Members of
the Subcommittee on Consumer Protection, Product Safety, and Data Security of the
Senate Committee on Commerce, Science, and Transportation, thank you for the op-
portunity to appear before you today.
Chair Blumenthal, I would especially like to thank you for organizing this criti-
cally important hearing and for your tireless championing of consumer protection.
Senator Blackburn and Subcommittee Members, your partnership and collaboration
with 3M during this pandemic is greatly appreciated, and I thank each of you as
well.
3M is grateful for the opportunity to testify on the subject of ‘‘Curbing COVID
Cons: Warning Consumers about Pandemic Frauds, Scams, and Swindles.’’ By way
of introduction, my name is Kevin Rhodes, and I am a Senior Vice President and
the Deputy General Counsel of 3M Company, based in St. Paul, Minnesota. In this
role, I am proud to be a leader of 3M’s ongoing efforts during the COVID–19 pan-
demic to address fraud, counterfeiting, and price gouging of personal protective
equipment, most notably respiratory protection products. Our efforts are designed
to help the heroic healthcare workers and first responders, who put their lives on
the line for others every day, get the genuine 3M N95 respirators 1 they need and
deserve at a fair price.
About 3M
Since its founding in 1902 in northern Minnesota as a small-scale mining venture,
3M has grown into a global, diversified technology company based on science applied
to life and bringing innovative new products to the market. 3M’s vision is to create
technologies and products that advance every company, enhance every home, and
improve every life; and today, some 95,000 3Mers work together to create more than
60,000 3M products that are used in homes, businesses, schools, hospitals, and other
industries around the globe.
Since long before the COVID–19 pandemic, 3M has been a leading provider of per-
sonal protective equipment (PPE) and medical solutions for medical professionals,
workers, and the public. Besides the disposable N95 respirators that are among
3M’s most widely-known personal protective equipment products, 3M is also a lead-
ing manufacturer and supplier of powered-air purifying respirators, elastomeric re-
usable respirators, and self-contained breathing apparatuses. In addition, 3M pro-
vides other critical products in support of the world’s pandemic response, including
hand sanitizer, single patient use stethoscopes, disinfectants, separation and purifi-
cation media used in vaccine manufacturing, oxygenator membranes, and dis-
infecting wipes.
3M’s response to the COVID–19 pandemic
From the outset of the COVID–19 pandemic, 3M has recognized and embraced its
responsibility to lead in supporting the public health response. In March of 2020,
Mike Roman, 3M’s Chairman of the Board and Chief Executive Officer, made clear
that 3M’s most urgent priority is protecting the health and safety of its employees
and others:
3M has a unique and critical responsibility in pandemic preparedness and re-
sponse—a responsibility I and all our people take very seriously. Our most ur-
gent priority is the safety of our employees, healthcare workers and the public.2

1 ‘‘N95 respirators’’ are filtering facepiece respirators approved by the United States National
Institute for Occupational Safety and Health (NIOSH) as capable of filtering at least 95 percent
of non-oily particles from the air breathed through the respirator when properly selected and
worn. See 42 C.F.R. Part 84—Approval of Respiratory Protective Devices.
2 ‘‘3M CEO on COVID–19 response: We have a unique and critical responsibility,’’ available
at https://news.3m.com/English/3m-stories/3m-details/2020/3M-CEO-on-COVID-19-response-
We-have-a-unique-and-critical-responsibility/default.aspx.

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22
3M has taken these words to heart. 3Mers across the globe have helped fulfill 3M’s
unique and critical responsibility by responding to the pandemic from all angles. We
have ramped up our United States and global manufacturing of disposable res-
pirators and are making nearly four times as many 3M N95 respirators than before
the pandemic. We are helping to ensure those products are getting to where they
are needed most by frontline workers, partnering not only with our authorized dis-
tributors, but also directly with Federal and state partners, including the Strategic
National Stockpile, the Department of Health and Human Services, and the Federal
Emergency Management Agency. In addition, we are aggressively targeting fraud,
counterfeiting, and price gouging by bad actors seeking to take advantage of the tre-
mendous demand for our products during the pandemic.3
Beginning in January of 2020, as we began to see the challenges that were com-
ing, 3M began surging its production of N95 and other respiratory products to un-
precedented levels. We ramped up production to full capacity at our factories mak-
ing respirators in the United States and around the world—doubling production
within two months. By the end of the year, we had manufactured two billion dispos-
able respirators globally—more than three times the number we produced in 2019.
3M also increased our supply of reusable respirators and powered air-purifying res-
pirators, which are often suitable alternatives to disposable N95 or similar res-
pirators.
In the United States, 3M quickly moved to full-capacity production of N95 res-
pirators, bringing surge manufacturing capacity on line for 24/7 production at our
facilities in Aberdeen, South Dakota; and Valley, Nebraska.4 3M also invested in
capital and resources to increase its United States N95 respirator production, and
partnered with the Department of Defense, via contracts awarded under the author-
ity of the Defense Production Act (DPA), to increase 3M’s N95 respirator manufac-
turing capacity in the United States. This increase in 3M’s United States production
includes a 120,000-square-foot expansion at 3M’s manufacturing facility in Aber-
deen, South Dakota, where 3M has added hundreds of new jobs since the pandemic
began. In the United States alone, 3M is now manufacturing more than 95 million
N95 respirators a month—up from 22 million a month prior to the pandemic.
With the global demand for N95 respirators and other PPE products exceeding
the supply available from 3M and other manufacturers since early in 2020, wrong-
doers have sought to exploit the public health emergency and prey on innocent par-
ties through a variety of unlawful scams, including fraudulent offers of N95 res-
pirators and other products in high demand, counterfeiting, price gouging, and other
unfair and deceptive practices—all of which undercut the integrity of the market-
place and constitute an ongoing threat to public health and safety. As explained in
more detail below, 3M has launched a global effort to help protect the public against
these pandemic profiteers and their unlawful activities. We have created and made
available many resources to help purchasers of respirators and the public avoid
these unlawful schemes. 3M has established and staffed new hotlines and web in-
take forms in the United States and around the world to help purchasers and end-
users of 3M products identify authentic 3M respirators and ensure products are
from 3M authorized distributors. 3M has published on our website the United
States list prices for many of the most common models of 3M N95 respirators to
help customers identify and avoid inflated prices. We have also filed lawsuits in
courts across the country against wrongdoers, terminated 3M distributors for engag-
ing in price gouging or violating 3M policy, and collaborated with technology compa-
nies to combat online fraud and deceptive trade practices. Our partnerships with
law enforcement and customs agencies around the world, including the United
States Department of Homeland Security (DHS) and United States Customs and
Border Protection (CBP), have resulted in raids and seizures that have removed
tens of millions of counterfeit respirators from the market before they could reach
unsuspecting users.
Pandemic profiteers: fraud, counterfeiting, and price gouging
It was not long after the COVID–19 pandemic began that 3M started to receive
reports of suspected fraud, counterfeiting, and price gouging connected with our
products. 3M moved quickly to form and deploy a dedicated team, including in-
house and outside attorneys, government affairs staff, and employees from across

3 For more on these and many more 3M actions to lead in the pandemic response, see ‘‘A year
of helping fight COVID–19,’’ available at https://news.3m.com/English/3m-stories/3m-details/
2021/-A-year-of-helping-fight-COVID-19/default.aspx.
4 See ‘‘How 3M Plans to Make More than a Billion Masks By End of Year,’’ available at
https://www.bloomberg.com/news/features/2020-03-25/3m-doubled-production-of-n95-face-
masks-to-fight-coronavirus.

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the company, working alongside federal, state, and international law enforcement
authorities and government officials, to help investigate and take action against
those involved in these unlawful and unethical activities.
From the outset, many of the reports we investigated involved fraudulent schemes
offering to sell nonexistent quantities of 3M N95 respirators to unsuspecting buyers,
including local, state or provincial, and Federal or national governments. Examples
include fraudsters claiming to have access to enormous quantities of 3M products—
sometimes billions or even trillions of respirators, representing hundreds or thou-
sands of years of 3M’s entire production capacity—when in fact they had no busi-
ness relationship with 3M and no access to 3M products. These scammers have
taken many approaches to try to convince would-be buyers that they have genuine
3M N95 respirators to sell. They have impersonated 3M employees, claimed to have
the ability to place orders directly with 3M factories, and represented that they are
directly affiliated with 3M as one of our authorized channel partners. Often these
fraudsters create fake invoices, purchase orders, letters, or e-mails purporting to be
from 3M or its executives, or other forged documents to support their claims of ac-
cess to 3M and its products.
The targets of these scams are not only private purchasers, but also government
procurement officials charged with using public funds to secure PPE supplies for
public sector frontline workers. These buyers often have longstanding relationships
with 3M authorized distributors and 3M has emphasized that these existing supply
chains are the safest way to secure genuine 3M products. 3M has explained that
offers of enormous quantities of what are claimed to be 3M respirators from new
sellers that no one has ever heard of before, or new companies that were only
formed after the pandemic started, or that have no experience in PPE supply, sound
too good to be true because they are not true.
The goal of these schemes is to secure payment in advance, before the buyer real-
izes the product does not exist. Thus, the payment terms usually include up-front
deposits, payments into escrow accounts that the purported seller may access, and
other schemes designed to allow the fraudster to secure funds in advance and then
disappear once the money is received. In addition to 3M’s hotlines offering support
to verify whether offers are from legitimate sellers, 3M also has published a list of
common schemes that do not match 3M’s business practices to help buyers identify
and avoid fraudulent offers.5
Typically, these schemes also involve price gouging, with the selling prices of the
purported 3M N95 respirators often being many multiples of the prices for authentic
3M respirators from 3M’s authorized distributors. These price gougers often target
government procurement officials charged with using precious public funds to secure
PPE supplies for public sector healthcare workers and first responders. To help buy-
ers identify and avoid inflated prices, early in the pandemic 3M took the important
step of publishing its single-case list prices for the most common 3M N95 respirator
models sold in the United States.6
As the pandemic progressed, reports of counterfeit respirators increased. Both the
number of counterfeiter manufacturers and the quantities of counterfeit products
they were offering for sale steadily increased as the demand for N95 respirators con-
tinued to exceed supply and counterfeiters set up manufacturing operations to cap-
italize on the opportunity to make and sell fake products. The counterfeit products
are often manufactured at scale and for cross-border sales, making it difficult to
track the source of products being offered for sale to end-users in the United States
or elsewhere. Although some of the counterfeit products may be identified by mis-
takes in packaging, missing straps, strange odors, blocked valves, and other readily-
apparent defects, counterfeiters have become increasingly sophisticated since the
pandemic began, making their fake respirators more difficult to distinguish from au-
thentic 3M products. 3M has responded by emphasizing that the best way to avoid
counterfeit products is to purchase 3M N95 respirators only from 3M authorized dis-
tributors, by posting tips on how to spot counterfeit products on our website, and
by publishing counterfeit alerts as we become aware of specific information that will
assist buyers and users in identifying and avoiding counterfeits, such as lists of
commonly counterfeited product models, product lot codes used by counterfeiters,
fake product seals, and other ways to spot counterfeit products.7

5 See https://multimedia.3m.com/mws/media/1860221O/covid-n95-selling-facts.pdf.
6 See https://multimedia.3m.com/mws/media/1862179O/get-the-facts-n95-respirator-pricing
.pdf.
7 See https://multimedia.3m.com/mws/media/1934748O/3m-counterfeit-communication-letter
.pdf; https://multimedia.3m.com/mws/media/1960842O/3m-8210-counterfeit-communication-
Continued

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The dangers of counterfeit respirators
3M has received questions about the performance of counterfeit respirators. The
answer is that the performance of these fake products is unknown, may be highly
variable, and cannot be trusted. There is a real danger that they will not provide
the level of protection wearers expect from genuine 3M N95 respirators. These coun-
terfeit products have not been NIOSH approved. They are not tested to see if they
meet the N95 standard. The people who are making these fakes are not interested
in testing them to see if they work. They are not interested in making high quality
products. They are interested in nothing more than fraudulent profiteering by mak-
ing as many as they can as cheaply as possible and passing them off as NIOSH ap-
proved, genuine 3M respirators.
Genuine 3M N95 respirators contain advanced filter material and are designed to
be tight fitting, forming a seal with the wearer’s face, so inhaled air passes through
the filter (instead of going around the edges). 3M N95 respirators contain propri-
etary, advanced electrostatic microfiber media to capture particles. 3M’s unique
manufacturing process injects an electrostatic charge into the microfibers, which are
arranged in an open formation, allowing for easier passage of air while also enhanc-
ing the capture of airborne particles. 3M N95 respirators are also designed to seal
to the wearer’s face—as fit and seal are critical to respirator performance. 3M N95
respirators are tested on an ongoing basis to ensure they meet filtration efficiency
requirements and other performance criteria specified in applicable government reg-
ulations. 3M has strict quality controls and manufacturing standards to help ensure
the consistent high performance and consistent fit of our products.
Counterfeit respirators, on the other hand, are not designed, tested, or approved
to ensure they perform as advertised. Counterfeit respirators are made by unknown
fraudsters, using unknown processes and materials, with unknown or nonexistent
quality controls. They do not come from 3M’s supply chain and are not manufac-
tured using 3M’s proprietary advanced materials or robust quality controls. There
is no telling how an individual counterfeit respirator will perform because counter-
feiters have little or no interest in quality control and thus there may be tremen-
dous product-to-product variability in fit, filtering ability, and performance. Coun-
terfeit products never should be trusted to provide respiratory protection for anyone
who needs it, let alone frontline workers in the fight against the pandemic.
As the Honorable Alejandro N. Mayorkas, Secretary, United States Department
of Homeland Security, said about counterfeit respirators during a press conference
announcing the seizure of more than eleven million counterfeits on February 18,
2021, ‘‘Not only do they give a false sense of security, but how dangerous is the ex-
posed individual? How dangerous is the individual confronting a potential COVID–
19 infection without any protective gear?’’ 8
Counterfeiters are criminals. They have no qualms putting fake NIOSH N95 cer-
tifications on their products. They have no qualms trying to pass their products off
as genuine using fake 3M logos and fake packaging. They have no qualms deceiving
frontline workers counting on genuine 3M N95 respirators and do not care whether
their products provide those frontline workers with protection or not. That is why
3M has been so active in communicating the dangers of counterfeit respirators. 3M
has stressed that avoiding counterfeits starts by knowing who is selling what are
claimed to be genuine 3M N95 respirators—in other words, is it really a 3M author-
ized distributor with access to genuine 3M products? 3M has communicated widely
that it stands ready to help answer that most important question. For anyone who
has any questions about whether respirators that have been purchased or that are
being offered for sale are authentic, 3M has the resources available to assist in au-
thenticating the product, via our anti-fraud hotlines or our 3m.com/covidfraud
website.
3M’s global response against respirator fraud, counterfeiting, and price
gouging
In March of 2020, 3M launched its global effort against respirator fraud, counter-
feiting, and price gouging. 3M did so to help protect healthcare workers, first re-
sponders, and others on the front lines of the fight against the COVID–19 pandemic
from counterfeit and inferior PPE products, to help reduce the money and time
wasted by government and other procurement personnel on fraud and scams, to ad-
dress exorbitant pricing by those seeking to take advantage of a public health crisis
for personal gain, and to make sure that 3M’s good name and reputation are not

letter.pdf; https://multimedia.3m.com/mws/media/1861617O/avoiding-counterfeit-respirators
.pdf.
8 ‘‘Feds seize more than 11 million fake N95 masks,’’ available at https://www.msn.com/en-
us/news/us/feds-seize-more-than-11-million-fake-n95-masks/ar-BB1dMdsF?li=BBnb7Kz.

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25
associated with fraudsters, counterfeiters, or other unscrupulous pandemic profit-
eers.
Our legal and government affairs functions have joined with hundreds of 3M em-
ployees across the company and around the world, as well as more than 30 law
firms representing 3M, to protect public health and the PPE supply chains sup-
porting healthcare workers and others responding to the pandemic. We track our
progress and the success of our efforts, regularly publishing updates on our website
so the public can stay informed and engaged in helping to identify unlawful activi-
ties, and to deter bad actors by communicating 3M’s sustained and substantial com-
mitment to finding and stopping their misconduct.
The latest update summary from our 3m.com/covidfraud website, showing the re-
sults of our efforts to date, is reproduced on the following page:9

9 See https://multimedia.3m.com/mws/media/1862180O/3m-covid-19-infographic-print-ver
sion.pdf.

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26
As the infographic indicates, 3M’s efforts start with creating opportunities for the
public to report suspected cases of fraud, counterfeiting, and price gouging. We have
created and staffed public hotlines in the United States and elsewhere around the
world to help callers identify authentic 3M products, ensure products are from 3M
authorized distributors, and report cases of suspected wrongdoing. Our website also
includes intake forms so the public can report cases of suspected fraud, counter-
feiting, and price gouging. Since the beginning of the pandemic, we have processed
more than 13,800 reports of suspected fraud, counterfeiting, and price gouging from
our hotlines and web intake forms. Similarly, we have established points of contact
for government procurement officials to validate third-party offers and quotes, and
have worked with federal, state, and local procurement officials across the country
to help determine the validity of PPE offers and proposals.
3M investigates and takes action on these reports in a number of ways. Many are
referred to law enforcement or other authorities for investigation and enforcement.
We have referred thousands of cases to Federal and state law enforcement, with
many leading to criminal or civil enforcement actions. 3M has partnered closely
with the United States Department of Justice COVID–19 Hoarding and Price
Gouging Task Force (the DOJ Taskforce), a combined effort involving attorneys from
Main Justice and participants from U.S. Attorney’s offices in every Federal district.
We have reached out to state attorneys general offices as well to brief them on our
efforts and to establish working relationships for information sharing and case refer-
rals.
The investigatory and enforcement powers of law enforcement have greatly en-
hanced the ability to take effective action based on reports 3M receives of suspected
illegal activities. Price gouging, for example, can be addressed effectively via our
close partnerships with the DOJ Taskforce and state attorneys general. 3M has re-
ferred numerous reports of suspected price gouging to the DOJ Taskforce and state
attorneys general for investigation and potential enforcement.10
3M also has filed legal actions directly against wrongdoers. 3M has filed 33 law-
suits in Federal courts across the United States and in Canada against defendants
engaged in fraud, counterfeiting and price gouging.11 3M has won 18 temporary re-
straining orders and 11 preliminary injunctions from Federal judges across the
country putting a stop to defendants’ unlawful conduct. In 20 of the cases, 3M has
reached settlements where the defendants agreed to cease their unlawful activities
immediately and permanently, subject to strict verification and disgorgement of ill-
gotten profits. In 17 of the cases, 3M has recovered monetary damages through
court orders or agreements by the defendants, and 3M is donating all of those recov-
eries to COVID–19 relief charities.
As an example, it was on April 10, 2020, at the height of the pandemic in New
York, that 3M filed its first Federal lawsuit, in the United States District Court for
the Southern District of New York against Performance Supply, LLC, a company
targeting public officials in a fraud and price gouging scheme. Performance Supply
offered to sell a Purchasing Agent at the New York City Office of Citywide Procure-
ment seven million nonexistent 3M N95 respirators for $45 million, representing a
markup 500 percent higher than 3M list prices. Thankfully, New York City officials
contacted 3M and we let them know the offer was fake. 3M sued and won a tem-
porary restraining order and a preliminary injunction, putting a prompt end to the
scam.12 We also shared the information we had discovered with law enforcement au-
thorities, who brought criminal charges of conspiring to commit wire fraud, wire
fraud, and conspiring to violate the DPA against Ronald Romano, the owner of Per-
formance Supply.13
An important element of 3M’s enforcement efforts is addressing false or deceptive
online business practices. 3M has partnered with some of the largest e-commerce
and technology companies in the world to secure the removal of tens of thousands
of e-commerce listings with fraudulent or counterfeit product offerings, false or de-
ceptive social media posts, and deceptive Internet addresses seeking to scam
unsuspecting buyers.

10 See, e.g., ‘‘New Jersey Man Arrested For $45 Million Scheme To Defraud And Price Gouge
New York City During COVID–19 Pandemic,’’ available at https://www.justice.gov/usao-sdny/
pr/new-jersey-man-arrested-45-million-scheme-defraud-and-price-gouge-new-york-city-during;
‘‘Santa Monica Woman Admits Price Gouging in Sale of Scarce N95 Masks She Sold at Huge
Markups over List Price During Pandemic,’’ available at https://www.justice.gov/usao-cdca/pr/
santa-monica-woman-admits-price-gouging-sale-scarce-n95-masks-she-sold-huge-markups.
11 A list of legal citations to these lawsuits is attached as Appendix A.
12 See 3M Co. v. Performance Supply, LLC, 458 F. Supp. 3d 181 (S.D.N.Y. 2020).
13 See ‘‘A Car Salesman, a Macedonian Ex-Minister and a $45 Million Mask Scheme,’’ avail-
able at https://www.nytimes.com/2020/05/26/nyregion/coronavirus-fraud-masks-new-york
.html.

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A case that illustrates how 3M has collaborated with online retailers to stop
scams is 3M Co. v. KM Bros Inc., et al., No. 2:20-cv-05049 MWF (JCx) (C.D. Cal.
2020). This case involved sellers on Amazon of fake, defective, and damaged res-
pirators under the 3M name and logo, at prices more than 20 times 3M list prices.
When buyers complained that they had received far fewer items than ordered, that
the items appeared not to be 3M products, and that the products were damaged and
in plastic bags rather than regular packaging, Amazon blocked the sellers’ accounts
and 3M filed suit.14 A settlement including a Consent Judgment and Permanent In-
junction put an end to the scam and disgorged the Defendants’ profits in the
amount of $192,000, which 3M donated to Direct Relief’s COVID–19 Fund for Com-
munity Health.15
3M’s partnerships with law enforcement and customs authorities around the
world have been particularly important in addressing the problem of counterfeit res-
pirators. This collaboration has helped prevent tens of millions of counterfeit res-
pirators from reaching frontline workers in the United States and elsewhere. In the
United States, 3M actively shares information and case referrals involving counter-
feiting with DHS, through Homeland Security Investigations (HSI) and the National
Intellectual Property Rights Center (IPR Center), and with CBP. An example of this
close collaboration is a recent investigation that HSI and the IPR Center launched
after 3M contacted them and shared information that had come in through our
fraud reporting process. 3M was contacted by a healthcare organization that had
read a counterfeit alert 3M posted on its website and realized that the respirators
it had purchased for its doctors and nurses had lot codes 3M identified as being
used by counterfeiters. The HSI/IPR Center investigation identified the source of the
counterfeit products and culminated in the announcement, on February 17, 2021,
that HSI special agents had executed multiple criminal search warrants and had
seized 11 million counterfeit masks in operations conducted in five states.16 That
matter is hardly unique: since the beginning of the pandemic, raids by law enforce-
ment and seizures by customs authorities around the world have removed more
than 38 million counterfeit respirators from the market before they could endanger
unsuspecting wearers.
As 3M’s N95 respirator manufacturing capacity in the United States and else-
where has increased, the gap between supply and demand has narrowed, and with
that narrowing we have seen a gradual decrease in the number of reports we have
received of unethical and unlawful business practices related to 3M N95 respirators.
The volume of reports also has decreased as 3M has widely publicized its anti-fraud
and anti-counterfeiting efforts, both to alert potential targets as to the nature and
risks of these schemes so they can avoid becoming victims, and to deter would-be
fraudsters by making clear 3M’s resolve to find and stop their unlawful behavior.17
Even with this decrease in the volume of reports to our hotlines and website, 3M’s
commitment to helping prevent fraud, counterfeiting, and price gouging before it
starts and to stop it where it is occurring remains unwavering, and 3M will continue
these efforts for as long as they are needed to support those serving so bravely on
the front lines of the COVID–19 response.
Lessons learned and suggestions for consideration
In January 2021, 3M published a white paper, entitled ‘‘Preparing Nations and
Protecting Lives: Pandemic Preparedness for Citizens and Economies,’’18 setting forth
a series of policy recommendations to strengthen pandemic preparedness and re-
sponse. The white paper explains how policymakers can help proactively combat
fraud and counterfeit PPE activity by taking steps to avert PPE demand spikes. The
recommendations include establishing robust stockpile programs, supporting resil-
ient PPE supply chains, and minimizing trade restrictions to promote global access
to an array of PPE products.
In addition, 3M has learned a number of lessons from its experience addressing
fraud, counterfeiting and price gouging during the COVID–19 pandemic, and re-
spectfully offers the following insights for consideration by policymakers:

14 See 3M Co. v. KM Bros. Inc., et al., No. 2:20-cv-05049 MWF (JCx), 2020 WL 8676137 (C.D.
Cal. 2020).
15 See ‘‘3M Settles N95 Price-Gouging Claims with Amazon Seller,’’ available at https://
news.bloomberglaw.com/ip-law/3m-settles-n95-price-gouging-claims-with-amazon-seller.
16 See ‘‘DHS prevents millions of counterfeit N95 masks from reaching hospital workers, first
responders,’’ available at https://www.ice.gov/news/releases/dhs-prevents-millions-counterfeit-
n95-masks-reaching-hospital-workers-first.
17 A list of Internet links to press coverage of 3M’s efforts to address fraud, counterfeiting,
and price gouging is attached as Appendix B.
18 https://www.3m.com/3M/en_US/worker-health-safety-us/epidemic-preparedness-and-stock-
piling/.

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• Even with more robust and secure domestic PPE supply chains, as well as gov-
ernment stockpiles, in a future pandemic the PPE marketplace may struggle to
keep up with dramatic spikes in demand, and this will create an opportunity
for unscrupulous actors seeking to take advantage of a public health crisis for
personal gain. Thus, pandemic preparedness planning should include specific
plans and dedicated resources for federal, state, and local governments to re-
spond quickly against fraud, counterfeiting, and price gouging. The DOJ Task
Force is an example of rapid and effective mobilization of Federal resources
against these unlawful activities. Federal agencies, such as the Federal Trade
Commission (FTC), also can play an important role by enforcing existing laws
and regulations against fraud, counterfeiting, and price gouging, seeking all
available relief to stop and deter these bad actors.
• Close public-private coordination among law enforcement, government agencies,
and suppliers of PPE that is subject to fraud, counterfeiting, and price gouging,
can be particularly effective in stopping unlawful actors. As I have described,
3M’s partnership with Federal and state law enforcement and agencies has
greatly enhanced the ability to take effective action based on reports 3M re-
ceives of suspected illegal activities. Such partnerships that have been effective
during the COVID–19 pandemic can serve as a model for securing PPE pan-
demic response supply chains in the future.
• With respect to counterfeit PPE, much of the counterfeiting appears to be per-
petrated by manufacturers producing counterfeit products at scale for export.
Once such products enter the United States supply chain, they can be difficult
to identify, track, and remove from the marketplace before they get into the
hands of healthcare workers and other end users. The most effective way to
stop such counterfeits is before they enter the domestic supply chain. The cross-
border trade in counterfeit PPE requires multilateral solutions supported with
American leadership.
• Public education is important so that potential targets of scams—not only pri-
vate purchasers, but also government procurement officials charged with using
public funds to secure PPE supplies for public sector frontline workers—can
identify and avoid being victimized by fraud, counterfeiting, or price gouging.
Government agencies, such as the FTC, can play an important role in alerting
the public to the threats of fraud and counterfeit PPE.
• In terms of Federal government procurement of PPE supplies, more centralized
procurement for Federal agencies could help ensure distribution of supply is ap-
propriately prioritized and could lessen the risks of agencies reaching out to the
secondary market to fill urgent orders (e.g., rather than have agencies individ-
ually compete for scarce supplies, identify a single agency to serve as
‘‘consolidator’’ of orders across agencies, working to secure PPE from trusted
suppliers).

***
Chair Blumenthal, Ranking Member Blackburn, and Distinguished Members of
the Subcommittee, I thank you again for the opportunity to offer these views on the
subject of ‘‘Curbing COVID Cons: Warning Consumers about Pandemic Frauds,
Scams, and Swindles.’’ 3M is proud of our hard work to fulfill our unique and crit-
ical responsibility in pandemic preparedness and response as a leading supplier of
N95 respirators and other PPE that are so important to the fight against the
COVID–19 pandemic, as well as our efforts to address the reports of fraud, counter-
feiting, and price gouging that have arisen in connection with these products during
the pandemic. 3M very much appreciates the interest and engagement by Members
of this Subcommittee and their staffs on these critical topics of PPE supply chain
integrity and public health and safety. 3M remains committed to addressing this un-
ethical and unlawful activity and to continuing to work with members of the Sub-
committee, their staffs, and other stakeholders to stop and prevent it.
I will be pleased to answer any questions or to supply additional information for
the record.

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APPENDIX A
3M lawsuits alleging COVID–19 related fraud, counterfeiting, and price gouging.
1. 3M Co. v. Shopify Inc., No. cv-20–28883 (Can. Ont. Sup. Ct. Apr. 8, 2020)
2. 3M Co. v. John Doe, No. DC–20–05549 (Dall. Cnty. 193rd Jud. Dist. Apr. 10,
2020)
3. 3M Co. v. Performance Supply, LLC, No. 1:20-cv-02949 (S.D.N.Y. Apr. 10,
2020)
4. 3M Co. v. RX2LIVE, LLC, No. 1:20-cv-00263 (E.D. Cal. Apr. 10, 2020)
5. 3M Co. v. Geftico, LLC, No. 6:20-cv-00648 (M.D. Fla. Apr. 14, 2020)
6. 3M Co. v. Hulomil, LLC, No. 3:20-cv-00394 (W.D. Wis. Apr. 28, 2020)
7. 3M Co. v. 1 Ignite Capital, LLC, et al., No. 4:20-cv-00225 (N.D. Fla. Apr. 30,
2020)
8. 3M Co. v. King Law Center, Chartered, No. 6:20-cv-00760 (M.D. Fla. Apr. 30,
2020)
9. 3M Co. v. TAC2 Global LLC, No. 8:20-cv-01003 (M.D. Fla. Apr. 30, 2020)
10. 3M Co. v. Zachary Puznak, et al., No. 1:20-cv-01287 (S.D. Ind. Apr. 30, 2020)
11. 3M Co. v. Zhiyu Pu, et al., No. cv-20–28903 (Can. Ont. Sup. Ct. May 11, 2020)
12. 3M Co. v. Burris Wollsieffer, et al., No. 2:20-cv-00336 (D. Utah May 29, 2020)
13. 3M Co. v. Matthew Starsiak, et al., No. 20-cv-01314 (D. Minn. June 5, 2020)
14. 3M Co. v. Preventative Wellness Consultants LLC, No. 2:20-cv-02932 (S.D.
Ohio June 5, 2020)
15. 3M Co. v. KM Bros. Inc., et al., No. 2:20-cv-05049 (C.D. Cal. Jun. 8, 2020)
16. 3M Co. v. Legacy Med. Supplies, LLC, et al., No. 20-cv-01371 (D. Minn. June
15, 2020)
17. 3M Co. v. Nexus Med. LLC, et al., No. 1:20-cv-00697 (W.D. Tex. June 30,
2020)
18. 3M Co. v. Aime LLC, et al., No. 2:20-cv-01096 (W.D. Wash. July 15, 2020)
19. 3M Co. v. G7 Env’t LLC, et al., No. 20-cv-08892 (C.D. Cal. Sept. 28, 2020)
20. 3M Co. v. Am. Dental Equip. LLC, No. 5:20-cv-02128 (C.D. Cal. Oct. 9, 2020)
21. 3M Co. v. Premium Contractor Solution, LLC, No. 3:20-cv-00443 (S.D. Ohio
Oct. 29, 2020)
22. 3M Co. v. Dreside, Navitelia Indus. Inc., No. 20-cv-24489 (S.D. Fla. Oct. 30,
2020)
23. 3M Co. v. Addian, Inc., et al., No. 20-cv-4515 (N.D. Ga. Nov. 4, 2020)
24. 3M Co. v. Cmty. Attire, Inc., No. 20-cv-021250 (C.D. Cal. Nov. 6, 2020)
25. 3M Co. v. Individuals, P’ships, and Unincorporated Ass’ns, No. 20-cv-02348
(D. Minn. Nov. 17, 2020)
26. 3M Co. v. The Perfect Part Inc., et al., No. 20-cv-10540 (C.D. Cal. Nov. 18,
2020)
27. 3M Co. v. Paylessbeauty, No. 20-cv-10536 (C.D. Cal. Nov. 18, 2020)
28. 3M Co. v. Moonlight Med. Supplies & Equip. LLC, et al., No. 20-cv-3664 (N.D.
Tex. Dec. 17, 2020)
29. 3M Co. v. Nationwide Source, Inc., No. 20-cv-02694 (D. Minn. Dec. 30, 2020)
30. 3M Co. v. SLH Med. Supplies Inc., et al., No. 21-cv-40024 (D. Mass. Feb. 25,
2021)
31. 3M Co. v. CovCare Inc., et al., No. 21-cv-01644 (E.D.N.Y. Mar. 26, 2021)
32. 3M Co. v. MM Med. Supply, LLC, No. 21-cv-00771 (M.D. Fla. Mar. 31, 2021)
33. 3M Co. v. Ugly Juice, LLC, et al., No. 3:21-cv-02338 (N.D. Cal. Mar. 31, 2021)

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APPENDIX B
Press coverage of 3M’s efforts to address fraud, counterfeiting, and price gouging.
National Law Review: Respirator Mask Price Gouging and Trademark Infringe-
ment? Not on 3M’s Watch https://www.natlawreview.com/article/respirator-mask-
price-gouging-and-trademark-infringement-not-3m-s-watch-0
Law 360: Facing COVID 19 scams, companies turn to trademark law https://
www.law360.com/technology/articles/1321684/facing-covid-19-scams-companies-
turn-to-trademark-law?nl_pk=d6fd733f-adac-44fb-b79e-ee82f582357c&utm_source=
newsletter&utm_medium=e-mail&utm_campaign=technology
Law 360: 3M Sues Amazon Seller Over Fake N95 Masks 3M Sues Amazon Seller
Over Fake N95 Masks
Law 360: 3M Wins Restraining Order In Price-Gouging Case: https://www
.law360.com/lifesciences/articles/1267281
Bloomberg Law: 3M gets more settlements in campaign against mask price-gouging
https://news.bloomberglaw.com/ip-law/3m-gets-more-settlements-in-campaign-
against-mask-price-gouging
Miami Herald ‘Maker of essentially N95 masks says it’s targeting Florida’s
fraudsters and profiteers’ https://www.miamiherald.com/news/politics-government
/state-politics/article242081256.html
Wall Street Journal: 3M Sues Mask Seller for Alleged Price-gouging trademark in-
fringement https://www.wsj.com/articles/3m-sues-mask-seller-for-alleged-gouging-
trademark-infringement-11586529025
Wall Street Journal: 3M files lawsuit against merchant selling masks on Amazon
for 18 times list price https://www.wsj.com/articles/3m-files-lawsuit-against-mer-
chant-selling-masks-on-amazon-for-18-times-list-price-11591642637
CNN: 3M sues over another company’s marked-up offer to New York City of N95
masks https://www.cnn.com/2020/04/10/politics/3m-sues-new-york-city-n95-
masks/index.html
Washington Post: Used car salesman tried to scam New York out of 45 million N95s
https://www.washingtonpost.com/nation/2020/05/27/used-car-salesman-tried-
scam-new-york-out-45-million-n95-masks-he-didnt-have-feds-say/
New York Times: Bethany Frankel’s Dark Journey to Find N95 masks https://
www.nytimes.com/2020/05/21/technology/bethenny-frankel-medical-masks-
coronavirus.html
New York Times: Company Questions Deal by ‘Shark Tank’ Star to Sell N95 Masks
to Florida https://www.nytimes.com/2020/04/22/us/daymond-john-n95-masks-
florida-3m.html
Good morning America: 3M Warns of counterfeit N95 masks: https://www
.goodmorningamerica.com/news/video/warning-counterfeit-face-masks-71837474
Fox Business News: 3M lawsuit alleges price gouging https://www.foxbusiness.com/
money/3m-lawsuit-mask-price-gouging-ny
Fox 3M sues KM brothers and preventative wellness over PPE fraud https://
www.foxbusiness.com/markets/3m-lawsuits-km-brothers-preventative-wellness
The Hill: 3M claims distributor tried to sell masks to NYC officials https://
thehill.com/homenews/news/492261–3m-claims-distributor-tried-to-sell-masks-to-
nyc-officials-for-six-times-price
The Verge: 3M sues Amazon storefront that allegedly sold fake N95 masks for $23
apiece https://www.theverge.com/2020/6/9/21285364/amazon-marketplace-mask-
price-gouging-n95-3m-ppe
Pioneer Press: 3M alleges price gouging in legal action against Canadian company
https://www.twincities.com/2020/04/21/3m-alleges-price-gouging-in-legal-action-
against-canadian-company-selling-n95-masks/
Associated Press: 3M files 18 lawsuits against mask profiteers https://apnews.com/
article/f6f7ca233d85ef59cc89396b1e0779ba
The Guardian: 45M deal for NHS masks collapses among claims https://www
.theguardian.com/society/2020/nov/03/45m-deal-for-nhs-masks-collapses-amid-
claims

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31
Globe and Mail: Giant 3M launches lawsuits in Ontario against PPE fraud: https://
www.theglobeandmail.com/business/article-us-giant-3m-launches-lawsuits-in-on-
tario-several-us-states-to/
Star Tribune: 3M gains another victory in effort to thwart N95 price gouging fraud
https://m.startribune.com/3m-gains-another-victory-in-efforts-to-thwart-n95-price-
gouging-fraud/572182922/
WCCO/CBS: 3M fighting to keep counterfeit N95s off the frontline https://min-
nesota.cbslocal.com/video/5303990–3m-fighting-to-keep-counterfeit-masks-off-the-
frontline/
DHS Press Release/Story https://www.ice.gov/news/releases/dhs-prevents-millions-
counterfeit-n95-masks-reaching-hospital-workers-first
Associated Press US Government Seizes More than 10 million fake 3M brand N95s
The Hill https://thehill.com/policy/national-security/539322-federal-agents-seize-
more-than-11-million-fake-n95-masks
Wall Street Journal https://www.wsj.com/articles/u-s-agents-seize-10-million-coun-
terfeit-n95-face-masks-11613603061
CNBC DHS seizes 11 million counterfeit 3M N95 masks, more raids to come
CBS Evening News featuring video with 3M VP and General Counsel Kevin
Rhodes—https://www.cbsnews.com/news/n95-masks-counterfeit-homeland-security/
The Guardian https://www.theguardian.com/world/2021/feb/17/fake-n95-masks-
coronavirus-usa
CBS: https://minnesota.cbslocal.com/2021/02/15/not-a-problem-that-is-going-away
-3m-fighting-to-keep-counterfeit-n95-masks-off-the-frontline/
Law 360: WB Mason preyed on buyers with fake 3M masks https://www.law
360.com/articles/1356806/wb-mason-preyed-on-buyers-with-fake-3m-masks-suit-says
Law 360: 3M makes deal with ex marine over massive N95 scam https://www
.law360.com/articles/1323511/3m-makes-deal-with-ex-marine-over-massive-n95-
mask-scam
Wall Street Journal: 3M Sues Mask Seller for Alleged Gouging Trademark Infringe-
ment
CNN: 3M Sues In New York City Over Price Gouging of N95 Masks
CNBC: 3m Sues New Jersey Company for Alleged Price Gouging Of Masks
New York Times: 3M Sues Distributor for Alleged Price Gouging of N95 Respirators
in New York
New York Daily News: Lawsuit by 3M accuses NJ business of massive price-gouging
scam, peddling protective N95 masks at staggering 600 percent markup
Reuters: 3M Sues New Jersey Distributor Over Alleged Price Gouging of N95 Res-
pirators in NYC
The Hill: 3M claims distributor tried to sell masks to NYC officials for six times the
price
Star Tribune: 3M suit: Distributor tried to sell N95 masks to NYC for 600 percent
above list price
FOX10 News:3M sues over another company’s marked-up offer to New York City of
N95 masks
Star Tribune: 3M suit: Distributor tried to sell N95 masks to NYC for 600 percent
above list price
Bloomberg Law: 3M Sues Unauthorized Vendor for NYC N95 Mask Price-Gouging
Daily Beast: New Jersey Company Tried to Sell New York Masks at 500 percent
Markup
The Street: Lawsuit Charges New Jersey Company with Price Gouging N95 Masks
Channel News Asia: 3M sues distributor for alleged price gouging of N95 respirators
in New York
Yahoo Finance: 3M sues Performance Supply alleging illegal price gouging of N95
face masks

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MSN: 3M sues New Jersey company for alleged price gouging of masks to NYC offi-
cials
NBC New York: NJ Company Allegedly Tried to Sell Masks to NYC at 600 percent
Markup, Suit Says
Financial Post: 3M Sues for Alleged Price Gouging in New York
FinanzNachrichten.de: 3M Sues Performance Supply Over N95 Mask Price Gouging
FOX10 News:3M sues over another company’s marked-up offer to New York City of
N95 masks
Bloomberg Law: 3M Sues Unauthorized Vendor for NYC N95 Mask Price-Gouging
Florida Post: 3M sues New Jersey company for alleged price gouging of masks to
NYC officials

Senator BLUMENTHAL. Thank you, Mr. Rhodes.
And now Cynthia Alexander remotely. Thank you.

STATEMENT OF CYNTHIA ALEXANDER, ASSISTANT ATTORNEY
GENERAL, CONSUMER PROTECTION DIVISION,
WASHINGTON ATTORNEY GENERAL’S OFFICE
Ms. ALEXANDER. Thank you, Chair Blumenthal and Ranking
Member Blackburn and distinguished members of the Committee,
for this opportunity to testify about COVID scams and how we can
work together to protect consumers from fraud.
I’m an Assistant Attorney General in the Consumer Protection
Division of the Washington State Attorney General’s Office, and
here in Washington State, our courts are fond of repeating a quote
from the 1914 House Conference Report on the FTC Act regarding
unfair business practices and the quote is, ‘‘There is no limit to
human inventiveness in this field.’’
I think it’s fair to say more than a hundred years on this obser-
vation is still on point. It certainly is in our state.
In Washington, as in many other states, the Consumer Protec-
tion Division of the Attorney General’s Office houses a Consumer
Resource Center that receives complaints from consumers about
businesses that operate in Washington and offers a voluntary com-
plaint resolution process.
In the early months of the pandemic last year, we began to see
our complaint volume double. A significant portion of the com-
plaints we received related to price gouging or failure to refund
fees paid for travel or events or memberships that were affected by
COVID restrictions, but I’m going to focus today on a few of the
COVID-related scams we’ve seen in Washington.
One area of particular concern for our office has been the mar-
keting of unsubstantiated COVID treatments. We investigated a
number of individuals and businesses engaged in this conduct and
we used a combination of enforcement tools, including cease and
desist notices from the Attorney General, warning letters and law-
suits in our efforts to stop this conduct and protect our consumers
in Washington.
For example, early in the pandemic, a Washington company
began promoting a virus-destroying drink to consumers. The com-
pany’s chief research director said in an e-mail sent to Washing-
tonians, ‘‘I think this drink is so incredibly promising for protection
from this pandemic that I’m giving it to my pregnant wife and 19-

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month-old daughter daily. So be sure to click the link below to get
the details.’’
We also received complaints about an allergy clinic that was ad-
vertising treatments for COVID–19 and when our investigator
called to ask what treatments they were offering, they said im-
mune system boosting.
These two matters we resolved with a cease and desist letter in
one case and a warning letter in another case, but we did file a
lawsuit against an individual who announced on Facebook that he
had developed a COVID–19 vaccine and offered to vaccinate con-
sumers for $400 each, and in the course of the investigation, we
learned he admitted that he had injected about 30 consumers with
this product. So the Attorney General filed a lawsuit against him
in Washington Superior Court that resulted in a consent decree
that prohibits this kind of conduct and required him to provide full
restitution to consumers for the amounts they paid as well as pay
civil penalties.
Now that COVID vaccines have become available, we’re seeing
an increasing number of vaccine-related scams. For example, we’ve
become aware of blank or fraudulently completed vaccine cards
bearing the CDC logo being offered for sale on some online plat-
forms and so earlier this month, 46 state attorneys generals signed
a letter to companies with major online platforms expressing these
concerns and requesting that the companies take immediate action
to monitor their platforms for these fake vaccine cards, to promptly
take down any ads or links for them, and to preserve all their
records.
We’ve also become aware of COVID–19 vaccine survey scams in
which consumers who have been vaccinated receive a text or an e-
mail asking them to complete a survey about the vaccine they just
received and typically the consumers are then offered a free reward
but asked to pay a nominal shipping fee and then they’re billed for
the fee but never receive an award.
And then most recently, we’ve heard about portable COVID test-
ing operations in our community that aren’t endorsed by local or
state health departments. These operations have apparently set up
testing tables in neighborhoods and parks and it’s been observed by
local health officials that the testers may be collecting and holding
personal information insecurely, falsely claiming to be with public
health, and despite offering free testing, the fine print in their doc-
uments that indicate that consumers could be billed.
So these are just a few examples of the types of COVID schemes
we’ve seen and so combining consumer fraud requires vigilance and
persistence and partnership and collaboration with other Federal
and state enforcement agencies.
So I want to take just a second to say one important tool for us
is our collaboration with the FTC and because of that, the impor-
tance of that partnership, many of the states are very interested
in the FTC’s 13B authority to obtain equitable monetary relief.
Washington joined 28 other states and the District of Columbia
in filing an amicus brief in the AMG case because our enforcement
efforts are very much fortified by having a strong Federal partner
in the FTC and we benefit from the FTC’s independent authority
to obtain redress for consumers.

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It’s a critical supplement to the states’ efforts because the FTC
can obtain restitution for consumers for unlawful activity that
spans multiple states.
So thank you for the opportunity to testify about these important
issues, and I’d be happy to answer your questions.
[The prepared statement of Ms. Alexander follows:]
PREPARED STATEMENT OF CYNTHIA L. ALEXANDER, J.D., PH.D., CONSUMER
PROTECTION DIVISION, WASHINGTON ATTORNEY GENERAL’S OFFICE
Chair Blumenthal, Ranking Member Blackburn, and distinguished members of
the subcommittee, I am pleased to testify before you today to discuss protecting con-
sumers from COVID–19-related scams.1
As the 1914 House Conference Report on the Federal Trade Commission Act put
it in reference to unfair business practices, ‘‘[t]here is no limit to human inventive-
ness in this field.’’ 2 Our Washington courts have frequently repeated this quote in
their decisions interpreting Washington’s Consumer Protection Act,3 and, more than
100 years later, the COVID–19 pandemic has underscored how incontrovertible this
observation remains.
In Washington, as in many states, the Consumer Protection Division of the Attor-
ney General’s Office houses a Consumer Resource Center that receives complaints
from consumers about businesses that operate in Washington, and offers a vol-
untary complaint resolution process. Before the COVID pandemic, our office typi-
cally received approximately 17,000 to 18,000 consumer complaints each year. In
2020, the number of consumer complaints we received increased by 50 percent. In-
deed, in the early months of the pandemic, our complaint volume doubled. In re-
sponse to this spike in complaint volume, the Attorney General initiated new proc-
esses to ensure that COVID–19-related complaints were reviewed immediately, and,
where appropriate, acted upon as quickly as possible.
A significant portion of the COVID–19-related complaints we received related to
price gouging or failure to refund fees paid for travel, events, or memberships af-
fected by COVID restrictions, but I will focus my testimony today on COVID–19-
related scams we have seen in Washington.
One area of particular concern for our office has been the marketing of unsubstan-
tiated COVID–19 treatments. We have investigated a number of individuals and
businesses engaging in this conduct, and used a combination of enforcement tools,
including cease and desist notices, warning letters, and court filings in our efforts
to protect Washington consumers.
For example, early in the pandemic, a Washington company began promoting a
‘‘virus destroying drink’’ to consumers. The company’s Chief Research Director stat-
ed in an e-mail sent to Washington consumers ‘‘I think this drink is so incredibly
promising for protection from this pandemic that I’m giving it to my pregnant wife
and 19-month-old daughter daily . . . so be sure to click the link below to get the
details.’’ The Attorney General sent a cease and desist notice to the company ex-
plaining that misrepresenting the health benefits of a product may violate Washing-
ton’s Consumer Protection Act and that the Attorney General would hold those who
deceive the public with unproven or false statements regarding the effectiveness of
COVID–19 treatments or preventative measure accountable during the emergency.
The company discontinued its marketing and agreed with us that ‘‘any and all con-
fusion around COVID–19 must be avoided.’’
We also received complaints about an allergy clinic that advertised testing and
treatments for COVID–19 on its website and on postcards sent to Washington con-
sumers. Alongside these offers, the clinic identified ‘‘tips to help strengthen your im-
mune system,’’ including various vitamins and supplements. We had an investigator
call the clinic to inquire about the types of COVID–19 treatments offered, and the
company representative who answered the phone responded that the clinic offered
immune system boosting. We sent a warning letter to the clinic that explained that
advertisements may violate our Consumer Protection Act if they represent that a
product or service yields a health benefit without competent and reliable scientific
evidence to substantiate those claims. The clinic stopped advertising COVID–19
treatment after receiving the letter.

1 Any opinions expressed in this written statement are mine and do not necessarily reflect
those of the Washington Attorney General’s Office.
2 H.R. Conf. Rep. No. 1142, 63d Cong., 2d Sess. 19 (1914).
3 Wash. Rev. Code § 19.86.

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We initiated an investigation into an individual who announced on Facebook that
he had developed a COVID–19 vaccine and offered to vaccinate consumers for $400
each. In the course of the investigation, he admitted that he had injected approxi-
mately 30 consumer with his product. The Attorney General filed a lawsuit against
him in Washington Superior Court that resulted in a consent decree with injunctive
terms enjoining him from marketing or selling any substance or product represented
to have health benefits without sufficient scientific evidence to substantiate the
claims. He was also required to provide full restitution to consumers for amounts
they paid for the vaccine and pay civil penalties.
Another category of COVID–19-related complaints we received, especially early in
the pandemic, involved businesses offering personal protective equipment for sale,
but failing to deliver the products to consumers. In some cases, the businesses
credibly explained that supply chain disruptions were preventing them from ful-
filling orders in a timely manner. For example, an online seller of N95 masks ex-
plained, in response to a cease and desist notice we sent, that it relied on drop ship-
ping rather than physical inventory, and was caught off guard when the extreme
surge in demand for N95 masks caused its supplier to be unable to fulfill its orders,
and, in turn, its credit card payment processor to freeze its accounts. The company
provided instructions to the Washington consumers who complained to request
chargebacks to their credit cards.
Now that COVID–19 vaccines have become available, we are seeing an increasing
number of vaccine-related scams. For example, we have become aware of blank or
fraudulently completed vaccine cards bearing the Centers for Disease Control and
Prevention logo being offered for sale on a number of online platforms. On April 1,
2021, 46 state Attorneys General signed a letter to Twitter, Shopify, and eBay ex-
pressing concern about the use of their platforms for the marketing and sale of fake
COVID vaccine cards. The letter requested that the companies take immediate ac-
tion to (1) monitor their platforms for ads or links marketing, selling, or otherwise
indicating the availability of blank or fraudulently completed vaccine cards; (2)
promptly take down ads or links identified through that monitoring; and (3) pre-
serve records pertaining to any such ads or links. Each company responded with
their commitment to prevent blank or fraudulently completed vaccine cards from
being marketed or sold on their platforms.
We have also become aware of COVID–19 vaccine survey scams in which con-
sumers who have been vaccinated receive a text or e-mail asking them to complete
a survey about the vaccine they received. The consumers are offered a free reward
but asked to pay a nominal ‘‘shipping’’ fee. They are billed for the fee but never re-
ceive the reward. For example, a Washington consumer received a survey about the
Moderna vaccine after he received that type of vaccine. The consumer was offered
entry into an Apple iPad giveaway for a shipping payment of $19.99. The consumer
was actually charged $39.99 and ended up having to cancel his credit card.
Most recently, we have heard about portable COVID–19 testing operations not en-
dorsed by local or state health departments. These operations have apparently set
up testing tables in neighborhoods and parks, and even gone door-to-door to con-
sumer homes. Our local public health officials have observed that the testers are
not using appropriate personal protective equipment such as masks, face shields or
gloves to protect consumers, are collecting and holding personal information inse-
curely, are falsely claiming to be ‘‘with public health,’’ and, despite signs offering
free testing, use paperwork indicating in fine print that consumers could be billed.
Combatting consumer fraud requires vigilance and persistence. I expect that we
will continue to see new COVID–19-related scams in Washington as the pandemic
enters the next phase, and we will continue to use all of the tools at our disposal
to protect our state’s consumers.
Because the subcommittee will address, in addition to COVID–19 scams, the
FTC’s threatened Section 13(b) consumer redress authority in light of the Supreme
Court’s ruling in AMG Capital Management, LLC v. FTC,4 I will briefly mention the
importance of the restitution remedy for our state enforcement efforts.
The Washington Consumer Protection Act confers broad equitable power on our
trial courts to fashion appropriate equitable remedies, including authorizing restitu-
tion of ‘‘moneys or property . . . which may have been acquired by means of any
act . . . prohibited or declared to be unlawful’’ by the Act.5 Washington case law
provides that restitution may be measured the defendant’s unlawful gain.6 Thus,

4 No. 19–508, 2021 WL 1566607 (U.S. Apr. 22, 2021).
5 Wash. Rev. Stat. 19.86.080(2).
6 See, e.g., State v. LG Electronics, Inc., 185 Wash. App. 123, 144 n.33, 340 P.3d 915 (2014),
aff’d, 186 Wash.2d 1, 375 P.3d 636 (2016).

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restitution ‘‘not only restores the property to the party but insures future compli-
ance where it is assured a wrongdoer is compelled to restore illegal gains.’’ 7
Washington joined 28 other states and the District of Columbia in filing an ami-
cus curiae brief in the AMG Capital Management case. The brief explained the
states’ interest in the FTC’s authority to seek restitution under Section 13(b) of the
Federal Trade Commission Act. The States and the District of Columbia explained
that the states’ enforcement efforts are fortified by having a strong Federal partner
in the FTC. Although each state authorizes its attorney general or other state agen-
cy to seek restitution to remedy anticompetitive, unfair, or deceptive practices, the
states benefit from the FTC’s independent authority to investigate and redress vio-
lations of Federal law. The FTC’s authority to seek restitution is a critical supple-
ment to the states’ efforts because it is able to efficiently obtain redress for con-
sumers affected by unlawful activity that spans multiple states. As the amicus brief
explained, without the FTC acting to obtain restitution for consumers nationwide,
every state touched by an incident of cross-border wrongdoing would need to file suit
or risk leaving victims uncompensated and wrongdoers inadequately deterred.
The combined efforts of Federal and state regulators create a powerful deterrent
effect. Restitution deters unlawful conduct because individuals and businesses are
more likely to comply with the law if they face the possibility of being compelled
to return their illegal gains.
Thank you for the opportunity to testify about these important issues, and I
would be happy to answer your questions.

Senator BLUMENTHAL. Thanks very much, Ms. Alexander.
And now to Bonnie Patten of Truth in Advertising. Thank you
for being here.
STATEMENT OF BONNIE PATTEN, CEO,
TRUTH IN ADVERTISING
Ms. PATTEN. Chairman Blumenthal, Ranking Member
Blackburn, Members of the Subcommittee, on behalf of Truth in
Advertising, I welcome the opportunity to appear before you to
highlight deceptive marketing schemes that have arisen during
this pandemic and to sound the alarm that the worst is ahead of
us as the FTC is now powerless to claw back ill-gotten gains from
wrong-doers under Section 13(b) of the FTC Act.
Tina.org is a nonpartisan/nonprofit consumer advocacy organiza-
tion whose mission is to combat deceptive advertising and con-
sumer fraud.
The list of deceptively marketed products and services exploiting
this pandemic that Truth in Advertising is tracking is extensive.
CBD products marketed to military veterans as a coronavirus
treatment, wellness centers targeting first responders with IV vita-
min drips to protect against COVID–19, Amazon and eBay sellers
falsely claiming that their PPE is FDA-approved, and sham
wellness kits targeting seniors.
The number of scams has been so prolific that the FDA and FTC
have had to issue more than 350 warnings pertaining to fraudulent
coronavirus tests, treatments, and vaccines.
Unfortunately, the deception does not stop with outrageous
health claims. Many are exploiting the economic desperation
wrought by this pandemic. Multilevel marketing companies claim-
ing that people can earn full-time pay working part time, lending
companies deceptively using the CARES Act to exploit debt-ridden
college students, vaccine survey scams stealing personal informa-
tion and money, and imposter scams where fraudsters contact
7 State v. Ralph Williams’ North West Chrysler Plymouth, Inc., 82 Wash.2d 265, 277, 510 P.2d
233 (1973)

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grieving families under the auspices of the Funeral Assistance Pro-
gram to steal personal data.
To make matters worse, the FTC has lost a mainstay of its en-
forcement authority, the ability to make victims whole under Sec-
tion 13(b). We must not lose sight of the fact that AMG directly im-
pacts more than 4.5 million struggling Americans in all 50 states.
This decision permits loan shark AMG to pocket $1.3 billion that
it stole from constituents in your communities. These victims need-
ed money to pay their rent, to put food on their table, and now
they’re left with nothing pursuant to this decision, and the victims
of AMG are not alone.
Another 2.7 million consumers illegally enrolled in credit moni-
toring services will not see a penny of the $5.3 million ordered in
restitution in the credit bureau case.
Likewise, consumers who were charged hundreds of millions of
dollars as a result of Abbvie’s use of sham litigation to illegally
maintain monopoly will not see any refunds. In fact, in the Abbvie
trial court decision which awarded the FTC $448 million, the judge
stated that if equitable relief was not permitted in 13B cases, ‘‘this
interpretation would eviscerate the FTC Act.’’
That’s just three cases. The FTC has approximately 75 13B cases
currently pending with more than $2 billion in exposure, including
the antitrust case against Facebook. Unless Congress acts to fix
13B, many of these cases will simply disappear and our senior citi-
zens, our military veterans, struggling parents, and honest busi-
ness owners will likely pay the price.
During these unprecedented times, it is imperative that the FTC
not only quickly stop deceptive marketing as soon as possible but
also expeditiously return ill-gotten gains to victims. At present, the
FTC simply cannot do that and as a result, your constituents and
the honest businesses in your communities will suffer the con-
sequences. Congress must provide a broad and permanent 13B fix.
Thank you and I look forward to answering your questions.
[The prepared statement of Ms. Patten follows:]

PREPARED STATEMENT OF TRUTH IN ADVERTISING, INC.
I. Introduction
Chairman Blumenthal, Ranking Member Blackburn, and Members of the Sub-
committee, on behalf of Truth in Advertising (TINA.org), I welcome the opportunity
to appear before you to highlight fraudulent and deceptive marketing schemes that
have arisen during this unprecedented crisis, and to sound the alarm that the worst
is yet to come as the Federal Trade Commission is now powerless to claw back ill-
gotten gains from wrongdoers under Section 13(b) of the FTC Act.1

1 See AMG Capital Mgmt., LLC, et al., v. Fed. Trade Comm’n, No. 19–508, slip op. (U.S. Apr.
22, 2021)), https://www.supremecourt.gov/opinions/20pdf/19-508_l6gn.pdf. Moreover, it is im-
portant to note that even the most rigorous of laws are of little value if the agency responsible
for enforcing them does not have the means or resources to properly police the marketplace.
Given the FTC’s limited resources, its current ability to oversee a multitrillion-dollar market-
place and protect more than 320 million consumers is clearly hampered. And while Congress
recently appropriated additional funds to the FTC, the Commission still remains significantly
under-resourced and over-leveraged, as Acting Chairwoman Rebecca Slaughter noted in her
April 20, 2021 testimony before the United States Senate Committee on Commerce, Science, and
Transportation Hearing on Strengthening the FTC’s Authority to Protect Consumers. As she
noted, ‘‘[e]ven before the recent merger wave, we were averaging twice as many annual merger
filings as we had been ten years ago, while our employee count remained flat. In fact, we had
50 percent more employees at the beginning of the Reagan administration as we do today. And
our filing rates keep going up. On the consumer protection side, there is similar growth in both
Continued

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Strengthening the Federal Trade Commission’s Authority to Protect Consumers: Hearing Be-
fore the Comm. on Commerce, Science, and Transp., 117th Cong. 2–3 (2021) (statement of Re-
becca Kelly Slaughter, Acting Chairwoman, Fed. Trade Comm.), https://www.ftc.gov/system/
files/documents/public_statements/1589184/opening_statement_april_20_senate_oversight_hear
ing_420_final.pdf. In short, unless more funding is allocated, it is impractical to think that the
FTC can do more.
My organization, TINA.org, is a nonpartisan, nonprofit consumer advocacy organi-
zation whose mission is to combat deceptive advertising and consumer fraud; we
work with businesses and government agencies on behalf of consumers to effectively
prevent and stop deception in our economy.
The central premise of modern consumer protection laws is that marketplace dis-
honesty causes harm to consumers and businesses alike; and, if left unchecked, such
behavior impairs the efficient allocation of resources in our economy.2 There can be
no doubt that the ongoing pandemic has exacerbated the ever-present dangers of de-
ceptive and unfair acts and practices in the marketplace. TINA.org has heard from
countless consumers—senior citizens, military veterans and struggling parents—
whose experiences illustrate the fact that deceptive marketing is putting the health,
financial well-being and safety of our most susceptible populations at risk. And
compounding these issues is the fact that communities of color and lower income
communities have been disproportionately impacted by fraudulent marketing and
misinformation concerning COVID–19.3
The list of deceptively marketed products and services exploiting this pandemic
is extensive. CBD products marketed to military veterans as a coronavirus treat-
ment;4 bleach advertised as a liquid cure-all;5 wellness centers targeting first re-
sponders with IV vitamin drips to protect against COVID–19;6 Amazon and eBay
sellers falsely claiming that their personal protective equipment (PPE) is FDA ap-

breadth and depth of problems in the markets, especially digital markets, that require enforce-
ment. But our ability to keep up with this volume of work against large, sophisticated compa-
nies without substantial increases in resources will be limited.’’
2 Jeff Sovern, Six Scandals: Why We Need Consumer Protection Laws Instead of Just Markets,

St. John’s Legal Studies Research Paper No. 21–0001 (2021), https://papers.ssrn.com/sol3/pa-
pers.cfm?abstract_id=3765745.
3 See, e.g., Ryan Zamarripa and Lorena Roque, Latinos Face Disproportionate Health and Eco-

nomic Impacts From COVID–19, Center for American Progress (Mar. 5, 2021), https://
www.americanprogress.org/issues/economy/reports/2021/03/05/496733/latinos-face-dispropor-
tionate-health-e conomic-impacts-covid-19/; Poll: 61 percent of U.S. households with children re-
port facing serious financial problems during the coronavirus outbreak, Harvard T.H. Chan
School of Public Health (Sept. 30, 2020), https://www.hsph.harvard.edu/news/press-releases/
poll-61-of-u-s-households-with-children-report-facing-serious-financial-problems-during-the-
coronavirus-outbreak/ (‘‘Many of these problems are concentrated among Black and Latino
households with children, households with children that have annual incomes below $100,000,
and households with children that have experienced job or wage losses since the start of the
outbreak.’’); Margery Austin Turner and Monique King-Viehland, Economic Hardships from
COVID–19 Are Hitting Black and Latinx People Hardest. Here Are Five Actions Local Leaders
Can Take, Urban Institute (Aug. 12, 2020), https://www.urban.org/urban-wire/economic-hard-
ships-covid-19-are-hitting-black-and-latinx-people-hardest-here-are -five-actions-local-leaders-can-
take; Brandi Collins-Dexter, Canaries in the Coal Mine: COVID–19 Misinformation and Black
Communities, Shorenstein Center on Media, Politics and Public Policy, John F. Kennedy School
of Government, Harvard University (June 24, 2020), https://shorensteincenter.org/canaries-in-
the-coal-mine/ (‘‘Even as Black people are disproportionately dying from the virus due to sys-
temic racism, harmful inaccuracies about how to keep from contracting COVID–19, how to treat
it, and where it comes from are metastasizing in Black online spaces, putting people at even
greater risk.’’).
4 Fed. Food & Drug Admin. and Fed. Trade Comm’n Warning Letter to Patriot Supreme

(Oct. 16, 2020), https://www.ftc.gov/system/files/warning-letters/fda-covid-19-letter-for_our_
vets_llc.pdf.
5 Press Release, The U.S. Dep’t of Justice, Justice Dep’t Seeks to End Illegal Online Sale of

Industrial Bleach Marketed as ‘‘Miracle’’ Treatment for COVID–19 (Apr. 17, 2020), https://
www.justice.gov/opa/pr/justice-department-seeks-end-illegal-online-sale-industrial-bleach-mar-
keted-miracle-treatment; Fed. Food & Drug Admin. Warning Letter to Genesis 2 Church (Apr.
8, 2020), https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/
warning-letters/genesis-2-church-606459-04082020.
6 IV Therapies and COVID–19: The Drip, Drip, Drip of Deceptive Claims, Truth in Advertising,

Inc., June 3, 2020, https://www.truthinadvertising.org/iv-therapies-and-covid-19-the-drip-drip-
drip-of-deceptive-claims/.

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39
proved;7 scammers simply failing to deliver paid-for PPE;8 hand sanitizers marketed
as providing 24-hour protection against COVID–19;9 alleged immunity-boosting sup-
plements targeted at children;10 risky colloidal silver solutions advertised as having
the ability to kill the virus from within;11 toothpastes and teeth-whitening products
claiming to prevent COVID–19;12 and sham wellness kits targeting seniors.13 The
number of scams has been so prolific that the FDA and the FTC have had to issue
numerous warnings pertaining to fraudulent coronavirus tests, treatments and vac-
cines.14
Unfortunately, the deception does not stop with outrageous health claims; many
are also exploiting the economic desperation wrought by this pandemic: multilevel
marketing companies claiming people can earn full-time pay working part-time;15
lending companies deceptively using the CARES Act to exploit college students;16
investment scams claiming to have patented COVID cures;17 financial entities pre-
tending to be SBA-authorized lenders to lure in small businesses struggling to keep
their workers employed;18 vaccine survey scams stealing personal information and

7 Face Mask Sellers on eBay Falsely Claim Products Are ‘FDA Approved’, Truth In Advertising,

Inc., May 13, 2020, https://www.truthinadvertising.org/face-mask-sellers-on-ebay-falsely-claim-
products-are-fda-approved/. It is often the case that products listed for sale in online market-
places are deceptively advertised. When presented with such findings, companies typically point
the finger at third-party vendors, deny liability, and use Section 230 of the Communications De-
cency Act as a shield. Removing the 230 shield from online commercial speech would allow the
FTC to hold third-party vendor sites accountable.
8 Press Release, The U.S. Dep’t of Justice, Michigan Man Charged With COVID–19-Related

Wire Fraud Scheme (Apr. 28, 2020), https://www.justice.gov/usao-ndca/pr/michigan-man-
charged-covid-19-related-wire-fraud-scheme.
9 Prompted by TINA.org, Hand Sanitizer Maker Removes COVID–19 Claims, Truth In Adver-

tising, Inc., May 20, 2020, https://www.truthinadvertising.org/prompted-tina-org-hand-sani-
tizer-maker-removes-covid19-claims/; CATrends: Hand Sanitizers Marketed to Prevent Disease,
Truth In Advertising, Inc., Apr. 9, 2020, https://www.truthinadvertising.org/catrends-hand-
sanitizers-marketed-to-prevent-disease/.
10 TINA.org Finds Plexus Deceptively Marketing Supplements for Kids, Truth In Advertising,

Inc., Aug. 12, 2020, https://www.truthinadvertising.org/tina-org-finds-plexus-deceptively-mar-
keting-supplements-for-kids/.
11 Jim Bakker Show Claims Silver Solution Supplement Kills Coronavirus, Truth In Adver-

tising, Inc., Feb. 19, 2020, https://www.truthinadvertising.org/the-jim-bakker-show-claims-sil-
ver-solution-supplement-kills-coronavirus/.
12 Press Release, New York State Attorney General, Attorney General James Orders Alex

Jones to Stop Selling Fake Coronavirus Treatments (Mar. 12, 2020), https://ag.ny.gov/press-re-
lease/2020/attorney-general-james-orders-alex-jones-stop-selling-fake-coronavirus-treatments;
Snow Teeth Whitening, Truth In Advertising, Inc., https://www.truthinadvertising.org/snow-
teeth-whitening/ (last visited Feb. 1, 2021).
13 Katherine Skiba, Pandemic Scammers Target Older Americans on Medicare, AARP, July 8,

2020, https://www.aarp.org/money/scams-fraud/info-2020/medicare-scams-coronavirus.html.
14 Beware of Fraudulent Coronavirus Tests, Vaccines and Treatments, U.S. Food & Drug

Admin., www.fda.gov/consumers/consumer-updates/beware-fraudulent-coronavirus-tests-vacci
nes-and-treatments (last visited Apr. 23, 2021).
15 How MLMs Exploit Consumers During A Pandemic, Truth In Advertising, Inc., Apr. 27,

2020, https://www.truthinadvertising.org/how-mlms-exploit-consumers-during-a-pandemic/;
Press Release, Fed. Trade Comm’n, FTC Sends Warning Letters to Multi-Level Marketers Re-
garding Health and Earnings Claims They or Their Participants are Making Related to
Coronavirus (Apr. 24, 2020), https://www.ftc.gov/news-events/press-releases/2020/04/ftc-sends-
warning-letters-multi-level-marketers-regarding-health. MLM companies and their distributors
are also taking advantage of the pandemic to make inappropriate health claims. Mixed Mes-
saging in the MLM Industry Regarding Coronavirus Claims, Truth In Advertising, Inc., Apr. 14,
2020, https://www.truthinadvertising.org/mixed-messaging-in-the-mlm-industry-regarding-coro
navirus-claims/.
16 Fed. Trade Comm’n Warning Letter to Frank Financial Aid (Nov. 10, 2020), https://www

.ftc.gov/system/files/warning-letters/covid-19-letter_to_frank.pdf.
17 Press Release, Fed. Trade Comm’n, Southland Man Arrested on Federal Charges Alleging

Fraudulent Investment Scheme Featuring Bogus Claims of COVID–19 Cure (Mar. 25, 2020),
https://www.justice.gov/usao-cdca/pr/southland-man-arrested-federal-charges-alleging-fraudu-
lent-investment-scheme-featuring.
18 Fed. Trade Comm’n and Small Bus. Admin. Warning Letter to TF Group, Inc. d/b/a Taycor

Financial (June 22, 2020), https://www.ftc.gov/system/files/warning-letters/sba-covid-19-letter-
taycor_financial.pdf, Fed. Trade Comm’n Warning Letter to sbaddisasterloan.org (June 22,
2020), https://www.ftc.gov/system/files/warning-letters/sba-covid-19-letter-sbadisasterloan.org_
.pdf.

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money;19 and imposter scams where fraudsters contact grieving families under the
auspices of the FEMA Funeral Assistance Program to steal personal data.20
And, to make matters worse, the agency primarily charged with policing these de-
ceptive acts, the FTC, has now lost a mainstay of its enforcement authority—the
ability to make victims whole under Section 13(b) of the FTC Act.21 Because Section
13(b) does not specifically mention the right to equitable relief when a permanent
injunction is issued, the Supreme Court has held in AMG Capital Management,
LLC, et. al. v. Federal Trade Commission that the FTC may not seek restitution or
disgorgement in any case brought under Section 13(b).22
It is important to remember the facts of AMG and appreciate the devastating im-
pact this decision will have on the company’s victims. AMG was a payday lending
scheme that extracted money from people in desperate circumstances.23 In its ap-
peal, the company did not dispute that it violated the law. Instead, it argued that
the $1.3 billion it stole should be its to keep and the Supreme Court has agreed
with AMG. The Supreme Court has held that this legislative body fully endorsed
the notion that wrongdoers should pocket the money they’ve illegally taken when
it drafted 13(b).24
Because the Supreme Court has ruled in AMG’s favor, there is an urgent need
for this Congress to empower the FTC to be able to seek equitable relief under Sec-
tion 13(b). If Congress fails to act, then the deceptive marketing practices I have
enumerated will only multiply. Allowing wrongdoers an absolute right to retain
funds under Section 13(b) is going to make consumers and our economy more vul-
nerable to harm, especially during these unprecedented times.
Moreover, if Congress truly wants to eradicate the deception that is plaguing our
economy, it must add to the FTC’s toolkit by permitting penalty authority over first-
time offenders; independent litigation authority to obtain civil penalties; a civil pen-
alty fund for victims; as well as enhancement of some tools that the FTC already
has at its disposal, including Administrative Procedure Act (APA) rulemaking au-
thority, mandating that funeral homes disclose their pricing lists on their websites,
requiring companies that use negative-option offers to simplify cancellations and
provide clearer renewal information, and exclude the protection of commercial
speech from Section 230 of the Communications Decency Act of 1996.25
At present, first-time offenders find it economically advantageous to ignore initial
FTC orders and settlements.26 Only when the calculus changes such that it becomes
economically disadvantageous to engage in deceptive marketing and fraud from the
outset will there be an impetus for all to champion truth in advertising.
II. Truth in Advertising, Inc.
Truth in Advertising (TINA.org) is a nonpartisan, nonprofit consumer advocacy
organization whose mission is to combat deceptive advertising and consumer fraud;
promote understanding of the serious harms commercial dishonesty inflicts; and
work with consumers, businesses, independent experts, synergy organizations and
government agencies to advance countermeasures that effectively prevent and stop
deception in our economy.

19 Watch Out for New Vaccine Survey Scams, AARP, https://states.aarp.org/montana/
vaccinesurveyscams (last visited Apr. 23, 2021).
20 Funeral Assistance FAQ, Fed. Emergency Mgmt. Agency, https://www.fema.gov/disasters/
coronavirus/economic/funeral-assistance/faq#scams (last visited Apr. 23, 2021); Michelle Single-
tary, A New FEMA Program Offers Up to $9,000 to Help with COVID–19 Funerals. Scammers
See an Opportunity, Apr. 16, 2021, https://www.washingtonpost.com/business/2021/04/16/
fema-covid-funeral-program-fraud-faq/.
21 15 U.S.C. § 53.
22 See AMG Capital Mgmt., LLC, et al., v. Fed. Trade Comm’n, No. 19–508, slip op. (U.S. Apr.
22, 2021), https://www.supremecourt.gov/opinions/20pdf/19-508_l6gn.pdf.
23 Press Release, The U.S. Dep’t of Justice, Scott Tucker Sentenced To More Than 16 Years
in Prison for Running $3.5 Billion Unlawful Internet Payday Lending Enterprise (Jan. 5, 2018),
https://www.justice.gov/usao-sdny/pr/scott-tucker-sentenced-more-16-years-prison-running-35-
billion-unlawful-internet-payday (‘‘For more than 15 years, [AMG’s] Scott Tucker . . . made bil-
lions of dollars exploiting struggling, everyday Americans through payday loans carrying inter-
est rates as high as 1,000 percent.’’)
24 See AMG Capital Mgmt., LLC, et al., v. Fed. Trade Comm’n, No. 19–508, slip op. at 14 (U.S.
Apr. 22, 2021) (‘‘We must conclude, however, that § 13(b) as currently written does not grant
the Commission authority to obtain equitable monetary relief.’’), https://www.supremecourt
.gov/opinions/20pdf/19-508_l6gn.pdf.
25 47 U.S.C. § 230.
26 Funeral Assistance FAQ, Fed. Emergency Mgmt. Agency, https://www.fema.gov/disasters/
coronavirus/economic/funeral-assistance/faq#scams (last visited Apr. 23, 2021); Michelle Single-
tary, A New FEMA Program Offers Up to $9,000 to Help with COVID–19 Funerals. Scammers
See an Opportunity, Apr. 16, 2021, https://www.washingtonpost.com/business/2021/04/16/
fema-covid-funeral-program-fraud-faq/.

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At the center of TINA.org’s efforts is its website, www.tina.org, which aims to re-
boot the consumer movement for the 21st century. The site provides information
about common deceptive advertising techniques, consumer protection laws and
alerts about specific deceptive marketing campaigns—such as nationally advertised
‘‘Built in the USA’’ vans manufactured abroad,27 and pillows and essential oils false-
ly marketed as able to treat chronic disease.28 The website functions as a clearing-
house, receiving consumer complaints about suspicious practices, which TINA.org
investigates, and, when appropriate, takes up with businesses and regulatory au-
thorities. The website is a repository of information relating to consumer protection
lawsuits and regulatory actions.
Through its collaborative approach and attention to emerging issues and complex-
ities, TINA.org has become a trusted source of expertise on matters relating to con-
sumer fraud. TINA.org regularly draws on this expertise to advocate for consumer
interests before the FTC and other governmental bodies and appear as amicus cu-
riae in cases raising important questions of consumer protection law.29
Since its inception, TINA.org has filed more than 200 legal actions, published
more than 1,000 ad alerts, written over 800 news articles, and tracked more than
2,000 Federal class actions alleging deceptive marketing. Notably, since 2015, state
and Federal agencies have obtained more than $250 million from wrongdoers based
on TINA.org legal actions and evidence, and returned millions in ill-gotten gains to
consumers.
III. Fraud, deception and scams during the COVID–19 crisis
During this pandemic, consumers nationwide have been inundated with deceptive
marketing campaigns seeking to exploit and capitalize on the global public-health
crisis.30 While some scams deplete bank accounts and retirement savings, others
have drastic consequences for consumers’ health and safety. Undoubtedly the
COVID–19 Consumer Protection Act of the 2021 Consolidated Appropriations Act,
which authorizes the FTC to seek civil monetary penalties for deceptive COVID–19
health claims and government benefit scams during the pandemic, will help to bring
select wrongdoers to justice.31 But, the Act is severely limited in time and scope –fail-
ing to capture broad-based economic scams, among other things.
a. Deceptive health claims
Deceptive advertising peddling unapproved treatments, cures, and preventatives
for a virus that has killed more than a half million people in the United States 32
flood the internet. The number of scams has been so prolific that the FDA and the
FTC have had to issue numerous warnings pertaining to fraudulent coronavirus
tests, treatments and vaccines.33 Not only do many of the deceptive ads target par-
ticularly susceptible populations, including parents of young children, first respond-
ers, military veterans, senior citizens and communities of color, many also promote
products that are inherently dangerous—some can cause severe health consequences
while others are advertised as negating the need to follow standard COVID–19 pre-

27 Sprinter Summary of Action, https://www.truthinadvertising.org/sprinter-summary-of-
action/ (last visited Feb. 1, 2021).
28 MyPillow Summary of Action, https://www.truthinadvertising.org/mypillow-summary-of-
action/ (last visited Feb. 1, 2021); doTerra Summary of Action, https://www.truthinadvertising
.org/doterra-summary-action/ (last visited Feb. 1, 2021); Young Living Summary of Action,
https://www.truthinadvertising.org/young-living-summary-action/ (last visited Feb. 1, 2021).
29 For example, TINA.org participated as amicus in AMG Capital Management., LLC v. Fed-
eral Trade Commission. Brief of Amicus Curiae Truth In Advertising, Inc. In Support of Re-
spondent, AMG Capital Mgmt., LLC v. Fed. Trade Comm’n, No. 19–508 (U.S. Dec. 7, 2020),
https://www.supremecourt.gov/DocketPDF/19/19-508/162934/20201207192719389_19-508%20
brief.pdf. TINA.org also filed an amici brief in Federal Trade Commission v. Quincy Bioscience
Holding Co., Inc., which reinstated a Section 13(b) suit against a business falsely marketing a
dietary supplement to the elderly as clinically proven to improve memory. Brief of Amici Curiae
Truth In Advertising, Inc., AARP, AARP Foundation, Advertising Law Academics, and National
Consumers League in Favor of Appellants and in Support of Reversal, Fed. Trade Comm’n v.
Quincy Bioscience Holding Co., Inc., 753 Fed. Appx. 87 (2d Cir. 2019) (No. 17–3745), https://
www.truthinadvertising.org/wp-content/uploads/2018/03/Prevagen_Amici-Curiae-brief.pdf.
30 FTC COVID–19 and Stimulus Reports, https://public.tableau.com/profile/federal.trade.
commission#!/vizhome/COVID-19andStimulusReports/Map.
31 COVID–19 Consumer Protection Act of the 2021 Consolidated Appropriations Act, Pub. L.
No. 116–260, 134 Stat. 1182, Division FF, Title XIV, § 1401.
32 Coronavirus Cases Are Rising Again. See How Your State is Doing, NPR, Apr. 22, 2021,
https://www.npr.org/sections/health-shots/2020/09/01/816707182/map-tracking-the-spread-
of-the-coronavirus-in-the-u-s.
33 Beware of Fraudulent Coronavirus Tests, Vaccines and Treatments, U.S. Food & Drug
Admin., www.fda.gov/consumers/consumer-updates/beware-fraudulent-coronavirus-tests-vaccin
es-and-treatments (last visited Apr. 23, 2021).

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vention and treatment recommendations, thereby increasing the risk that con-
sumers contract and spread COVID–19 or fail to obtain medically necessary treat-
ment.
Since the initial coronavirus outbreak, TINA.org has invested considerable re-
sources to investigate and track such scams.34 In February 2020, TINA.org wrote
about an ingestible silver solution falsely marketed as able to kill the coronavirus
from within. Not only was the treatment claim false, but the marketers also failed
to disclose the possible risks of consuming silver, which include cancer and birth de-
fects.35 A few months later, TINA.org outed more than 40 wellness centers across
the country deceptively promoting intravenous supplement/vitamin therapies as a
way to prevent and treat COVID–19, several of which specifically targeted first re-
sponders.36 Following this investigation, TINA.org exposed a multilevel marketing
company misleadingly marketing supplements as able to boost children’s immune
systems and keep them ‘‘virus free,’’ at a time when parents across the country were
grappling with whether or not to send their children back to school.37
TINA.org has also tracked reports of industrial bleach advertised under the name
‘‘Miracle Mineral Solution’’ as a treatment for COVID–19,38 accounts of CBD prod-
ucts marketed to military veterans as a coronavirus treatment,39 and Department
of Justice cases and civil lawsuits regarding toothpastes and teeth-whitening prod-
ucts claiming to prevent COVID–19.40
It is critical to note that while silver shards suspended in liquid, bleach, CBD,
and toothpaste may sound like suspect COVID–19 treatments and cure-alls, one
must remember that our country—and the world—is living through a time of un-
precedented uncertainty and fear, one that has prompted panic, heightened stress
and anxiety levels, and exacerbated mental health issues.41 Moreover, as a result
of historic and systemic racism, among other things, communities of color are vul-
nerable targets for fraud and deceptive marketing during this pandemic.42 Con-
sequently, consumers, desperate to care for themselves and their loved ones, are

34 A Growing List of Coronavirus Scams, Truth In Advertising, Inc., Mar. 16, 2020, https://
www.truthinadvertising.org/a-growing-list-of-coronavirus-scams/.
35 Jim Bakker Show Claims Silver Solution Supplement Kills Coronavirus, Truth In Adver-
tising, Inc., Feb. 19, 2020, https://www.truthinadvertising.org/the-jim-bakker-show-claims-sil-
ver-solution-supplement-kills-coronavirus/.
36 IV Therapies and COVID–19: The Drip, Drip, Drip of Deceptive Claims, Truth In Adver-
tising, Inc., June 3, 2020, https://www.truthinadvertising.org/iv-therapies-and-covid-19-the-drip
-drip-drip-of-deceptive-claims/.
37 TINA.org Finds Plexus Deceptively Marketing Supplements for Kids, Truth In Advertising,
Inc., Aug. 12, 2020, https://www.truthinadvertising.org/tina-org-finds-plexus-deceptively-mar-
keting-supplements-for-kids/. Several other MLM companies and their distributors have touted
their products as a way to prevent getting COVID–19. See, e.g., Herbalife Summary of Action,
https://www.truthinadvertising.org/herbalife-2020-summary-of-action/ (last visited Feb. 1,
2021) and Mixed Messaging in the MLM Industry Regarding Coronavirus Claims, Truth In Ad-
vertising, Inc., Apr. 14, 2020, https://www.truthinadvertising.org/mixed-messaging-in-the-mlm-
industry-regarding-coronavirus-claims/.
38 Press Release, The U.S. Dep’t of Justice, Justice Dep’t Seeks to End Illegal Online Sale of
Indus. Bleach Marketed as ‘‘Miracle’’ Treatment for COVID–19 (Apr. 17, 2020), https://
www.justice.gov/opa/pr/justice-department-seeks-end-illegal-online-sale-industrial-bleach-mar-
keted-miracle-treatment.
39 Fed. Food & Drug Admin. and Fed. Trade Comm’n Warning Letter to Patriot Supreme
(Oct. 16, 2020), https://www.ftc.gov/system/files/warning-letters/fda-covid-19-letter-for_our_
vets_llc.pdf.
40 Press Release, New York State Attorney General, Attorney General James Orders Alex
Jones to Stop Selling Fake Coronavirus Treatments (Mar. 12, 2020), https://ag.ny.gov/press-re-
lease/2020/attorney-general-james-orders-alex-jones-stop-selling-fake-coronavirus-treatments;
Snow Teeth Whitening, Truth In Advertising, Inc., https://www.truthinadvertising.org/snow-
teeth-whitening/ (last visited Feb. 1, 2021).
41 Emotional Well-Being and Coping During COVID–19, Univ. of California Weill Institute for
Neurosciences Dept. of Psychiatry and Behavioral Sciences, https://psychiatry.ucsf.edu/coping
resources/covid19 (last visited Feb. 1, 2021); Nirmita Panchal et al., The Implications of COVID–
19 for Mental Health and Substance Use, Henry J. Kaiser Family Foundation, Aug. 21, 2020,
https://www.kff.org/coronavirus-covid-19/issue-brief/the-implications-of-covid-19-for-mental-
health-and-substance-use/; Bilal Javed et al., The Coronavirus (COVID–19) Pandemic’s Impact
on Mental Health, Int. J. Health Plann Mgmt., June 22, 2020, https://www.ncbi.nlm.nih.gov/
pmc/articles/PMC7361582/.
42 Brandi Collins-Dexter, Canaries in the Coal Mine: COVID–19 Misinformation and Black
Communities, Harvard Kennedy School Shorenstein Center on Media, Politics and Public Policy
(2020), https://shorensteincenter.org/wp-content/uploads/2020/06/Canaries-in-the-Coal-Mine-
Shorenstein-Center-June-2020.pdf. (‘‘Even as Black people are disproportionately dying from the
virus due to systemic racism, harmful inaccuracies about how to keep from contracting COVID–
19, how to treat it, and where it comes from are metastasizing in Black online spaces, putting
people at even greater risk.’’)

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more susceptible to the compelling and persuasive marketing tactics used to sell
these bogus products.
The pandemic has also spurred ads deceptively promoting products aimed at pro-
tecting consumers from the virus. TINA.org stopped the maker of alcohol-free hand
sanitizers from deceptively claiming that its products ‘‘kill’’ the coronavirus for up
to 24 hours.43 Consumers have also complained of scammers advertising and sell-
ing—but never delivering—N95 masks and other PPE.44 And a TINA.org investiga-
tion revealed more than two dozen eBay sellers falsely claiming their face masks
were ‘‘FDA approved’’ or illegally using the FDA’s logo on product packaging or
other marketing to boost sales.45 There have also been numerous reports of schemes
targeting older Americans, including the offering of sham ‘‘COVID Wellness Kits’’
containing hand sanitizer and/or face masks to Medicare beneficiaries in order to
steal their Medicare numbers and other personal identifying information.46
These deceptive advertising tactics not only scam consumers out of their hard-
earned money, but may leave consumers unnecessarily vulnerable to the COVID–
19 virus. In short, the surge in exploitative health schemes employed during this
pandemic has risked, and continues to risk, the health and safety of consumers
across the country.
b. Fraudulent economic claims and imposter scams
Unfortunately, pandemic-related deception does not stop with outrageous health
claims; many are also exploiting the economic desperation brought on by this pan-
demic. TINA.org has exposed—in news stories,47 regulatory complaints 48 and a
warning letter 49—numerous MLM companies taking advantage of the pandemic to
promote what they claim to be lucrative business opportunities despite the fact that
most people who get involved in multilevel marketing make little to no money.50
TINA.org also sounded the alarm regarding investment news publisher Agora,
Inc. for exploiting financial uncertainties during the pandemic to lure consumers—
predominantly senior citizens—into pricey newsletter subscriptions with automatic
renewals.51 There have also been reports of lending companies deceptively using the
CARES Act to exploit debt-laden college students;52 financial entities pretending to

43 TINA.org’s Letter to Everest Microbial Defense, https://www.truthinadvertising.org/wp-

content/uploads/2020/05/4_30_20-TINA-warning-ltr-to-Everest-Microbial-Defense_Redacted.pdf.
44 Press Release, The U.S. Dep’t of Justice, Michigan Man Charged with COVID–19-Related

Wire Fraud Scheme (Apr. 28, 2020), https://www.justice.gov/usao-ndca/pr/michigan-man-
charged-covid-19-related-wire-fraud-scheme.
45 Face Mask Sellers on eBay Falsely Claim Products Are ‘FDA Approved’, Truth In Adver-

tising, Inc., May 13, 2020, https://www.truthinadvertising.org/face-mask-sellers-on-ebay-falsely-
claim-products-are-fda-approved/ (last visited Feb. 1, 2021).
46 Katherine Skiba, Pandemic Scammers Target Older Americans on Medicare, AARP, July 8,

2020, https://www.aarp.org/money/scams-fraud/info-2020/medicare-scams-coronavirus.html.
47 MLMs Continue to Break the Law Despite FTC Warning, Truth In Advertising, Inc.,

Dec. 15, 2020, https://www.truthinadvertising.org/mlms-continue-to-break-the-law-despite-ftc-
warning/.
48 Beautycounter Summary of Action, https://www.truthinadvertising.org/beautycounter-sum-

mary-action/ (last visited Feb. 1, 2021).
49 Market America Summary of Action, https://www.truthinadvertising.org/market-america-

summary-action/ (last visited Feb. 1, 2021).
50 How MLMs Exploit Consumers During a Pandemic, Truth In Advertising, Inc., Apr. 27,

2020, https://www.truthinadvertising.org/how-mlms-exploit-consumers-during-a-pandemic/;
Market America Summary of Action, https://www.truthinadvertising.org/market-america-sum-
mary-action/ (last visited Feb. 1, 2021); Beautycounter Summary of Action, https://www
.truthinadvertising.org/beautycounter-summary-action/ (last visited Feb. 1, 2021). See also Press
Release, Fed. Trade Comm’n, FTC Sends Warning Letters to Multi-Level Marketers Regarding
Health and Earnings Claims They or Their Participants are Making Related to Coronavirus
(Apr. 24, 2020), https://www.ftc.gov/news-events/press-releases/2020/04/ftc-sends-warning-let-
ters-multi-level-marketers-regarding-health; Press Release, Fed. Trade Comm’n, FTC Sends Sec-
ond Round of Warning Letters to Multi-Level Marketers Regarding Coronavirus Related Health
and Earnings Claims (June 5, 2020), https://www.ftc.gov/news-events/press-releases/2020/06/
second-round-warning-letters-to-mlms-regarding-coronavirus.
51 Agora Coronavirus E-mails, Truth In Advertising, Inc., Mar. 27, 2020, https://www

.truthinadvertising.org/agora-coronavirus-e-mails/. See also, Fed. Trade Comm’n v. Agora Fi-
nancial, LLC, No. 19-cv-3100 (D. Md.), https://www.ftc.gov/enforcement/cases-proceedings/182-
3116/agora-financial-llc.
52 Fed. Trade Comm’n Warning Letter to Frank Financial Aid (Nov. 10, 2020), https://www

.ftc.gov/system/files/warning-letters/covid-19-letter_to_frank.pdf.

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be SBA-authorized lenders to lure in small businesses struggling to keep their work-
ers employed;53 and investment scams claiming to have patented COVID cures.54
As with the onslaught of deceptive health claims, marketers making unsubstan-
tiated financial claims have similarly targeted vulnerable populations including re-
tirees, students in debt, and small businesses struggling to stay afloat during this
pandemic. There have also been reports of vaccine survey scams stealing personal
identifying information and money,55 and impost scams where fraudsters contact
grieving families under the auspices of the FEMA Funeral Assistance Program to
steal personal data.56
IV. The need for equitable relief under section 13(b) of the FTC Act
During these extraordinary times, it is imperative that the FTC not only stop de-
ceptive marketing as quickly as possible but also expeditiously return ill-gotten
gains to victims and honest businesses struggling to make ends meet. At present,
the Commission lacks authority to accomplish these twin objectives.
In 1973, Congress, realizing that the FTC’s slow-moving administrative regime
did not protect consumers from imminent harm and deception, added Section 13(b)
to the FTC Act to provide the Agency with a fast and effective means to halt illegal
conduct.57 Section 13(b) provides, in pertinent part, that the FTC ‘‘may seek, and
after proper proof, the court may issue, a permanent injunction.’’ 58 Though the stat-
ute does not specifically reference equitable relief, up until the Supreme Court’s rul-
ing in AMG last week, the majority of circuit courts to consider the issue (including
the Seventh Circuit 30 years ago) had held that Section 13(b) implicitly authorized
a wide range of equitable remedies, including restitution, rescission and disgorge-
ment.59
The FTC brought its first case for a 13(b) permanent injunction in 1979. There-
after, 13(b) became a mainstay of the FTC’s enforcement program with dozens of
cases brought under this section each year—among them Volkswagen,60 Herbalife,61
DeVry University,62 Office Depot 63 and Uber.64 In fact, from 2016 to 2020, the FTC

53 Fed. Trade Comm’n and Small Bus. Admin. Warning Letter to TF Group, Inc. d/b/a Taycor
Financial (June 22, 2020), https://www.ftc.gov/system/files/warning-letters/sba-covid-19-letter-
taycor_financial.pdf, https://www.ftc.gov/system/files/warning-letters/sba-covid-19-letter-sba
disasterloan.org_.pdf.
54 Press Release, The U.S. Dep’t of Justice, Southland Man Arrested on Federal Charges Alleg-
ing Fraudulent Investment Scheme Featuring Bogus Claims of COVID–19 Cure (Mar. 25, 2020),
https://www.justice.gov/usao-cdca/pr/southland-man-arrested-federal-charges-alleging-fraudu-
lent-investment-scheme-featuring.
55 Watch Out for New Vaccine Survey Scams, AARP, https://states.aarp.org/montana/
vaccinesurveyscams (last visited Apr. 23, 2021).
56 Funeral Assistance FAQ, Fed. Emergency Mgmt. Agency, https://www.fema.gov/disasters/
coronavirus/economic/funeral-assistance/faq#scams (last visited Apr. 23, 2021); Michelle Single-
tary, A New FEMA Program Offers Up to $9,000 to Help with COVID–19 Funerals. Scammers
See an Opportunity, Apr. 16, 2021, https://www.washingtonpost.com/business/2021/04/16/
fema-covid-funeral-program-fraud-faq/.
57 See Fed. Trade Comm’n v. Shire, 917 F.3d 147, 155 (3d Cir. 2019), https://
www2.ca3.uscourts.gov/opinarch/181807p.pdf. (‘‘Section 13(b) thus empowers the FTC to speed-
ily address ongoing or impending illegal conduct, rather than wait for an administrative pro-
ceeding to conclude.’’)
58 15 U.S.C. § 53.
59 After Credit Bureau, the Third Circuit held that Section 13(b) of the FTC Act does not per-
mit equitable relief. See Fed. Trade Comm’n v. AbbVie Inc., 976 F.3d 327, 376 (3d Cir. 2020),
https://www2.ca3.uscourts.gov/opinarch/182621p.pdf (‘‘If Congress contemplated the FTC
could sue for disgorgement under Section 13(b), it probably would not have required the FTC
to show an imminent or ongoing violation. That requirement suggests Section 13(b) does not em-
power district courts to order disgorgement.’’).
60 Press Release, Fed. Trade Comm’n, Volkswagen to Spend up to $14.7 Billion to Settle Alle-
gations of Cheating Emissions Tests and Deceiving Customers on 2.0 Liter Diesel Vehicles
(June 28, 2016), https://www.ftc.gov/news-events/press-releases/2016/06/volkswagen-spend-
147-billion-settle-allegations-cheating.
61 Press Release, Fed. Trade Comm’n, Herbalife Will Restructure Its Multi-level Marketing
Operations and Pay $200 Million For Consumer Redress to Settle FTC Charges (July 15, 2016),
https://www.ftc.gov/news-events/press-releases/2016/07/herbalife-will-restructure-its-multi-
level-marketing-operations.
62 Lesley Fair, FTC Case Against DeVry Yields $100 Million Settlement, Fed. Trade Comm’n,
https://www.ftc.gov/news-events/blogs/business-blog/2016/12/ftc-case-against-devry-yields-
100-million-settlement.
63 Press Release, Fed. Trade Comm’n, FTC Sending More Than $34 Million in Refunds to Of-
fice Depot Customers (Feb. 20, 2020), https://www.ftc.gov/news-events/press-releases/2020/02/
ftc-sending-more-34-million-refunds-office-depot-customers.
64 Press Release, Fed. Trade Comm’n, FTC to Send Refund Checks to Uber Drivers as Part
of FTC Settlement (July 16, 2018), https://www.ftc.gov/news-events/press-releases/2018/07/
ftc-send-refund-checks-uber-drivers-part-ftc-settlement.

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returned approximately $1.1 billion to consumers using 13(b).65 But now that the
Supreme Court has held that 13(b) permits wrongdoers the right to pocket the mon-
ies they have stolen.66 As such, the FTC will no longer be able to make victims of
fraud and deception whole using 13(b).
Consequently, as the coronavirus pandemic continues to ravage our nation, the
FTC will be powerless to provide consumers and honest businesses with swift and
equitable remedies and wrongdoers will no doubt be emboldened to exploit this na-
tional crisis for their own financial gains. Moreover, the Supreme Court decision in
AMG’s favor will have dramatic and dire consequences for the dozens of Section
13(b) cases the FTC currently has pending.67 The FTC’s docket currently includes
its antitrust complaint against Facebook,68 pyramid scheme cases against Neora 69
and Success By Health,70 its case against the makers of the deceptively marketed
memory supplement Prevagen,71 and the action it filed against a house-flipping
scam, which includes real estate celebrities Dean Graziosi and Scott Yancey as de-
fendants.72 In all of these 13(b) cases the FTC is now foreclosed from seeking mone-
tary relief, even if it prevails.
And to make matters worse, in 2019, the Third Circuit Court of Appeals ruled
in FTC v. Shire ViroPharma, Inc. that the FTC cannot seek equitable relief under
Section 13(b) if the alleged violation occurred in the past and the defendant was not
‘‘violating’’ or ‘‘about to violate’’ the law.73 As a result, wrongdoers that line their
pockets with money they have illegally obtained can now sail off into the sunset
with immunity just as long as they retire their scams before the FTC catches up
with them.
In order to effectively police wrongdoers and protect consumers and honest busi-
nesses, legislative action must be immediately taken to give the FTC the authority
it needs to obtain monetary remedies for past acts as well as present ones. The glar-
ing reality is that until Congress acts, wrongdoers will be free to steal, lie and cheat
their way to riches and they will have an absolute right to retain all funds they
steal from their victims. Every day that goes by without a 13(b) legislative fix will
undoubtedly negatively impact our economy and have a devastating impact on U.S.
consumers.
V. Equipping the FTC with independent penalty authority
The common thread that runs through all scams is the wrongdoers’ desire for fi-
nancial gain. While the COVID–19 Consumer Protection Act of the 2021 Consoli-
dated Appropriations Act authorizes the FTC to seek civil monetary penalties for
first-time violations, it is limited in time and only addresses deceptive COVID–19
health claims and government benefit scams.74 The Act fails to cover frauds and de-
ceptions that take advantage of the economic devastation wrought by this pandemic
such as work-from-home scams, phony job offers, pyramid schemes, and investment

65 Recent FTC Cases Resulting in Refunds, https://www.ftc.gov/enforcement/cases-pro-
ceedings/refunds (last visited Feb. 1, 2021).
66 See AMG Capital Mgmt., LLC, et al., v. Fed. Trade Comm’n, No. 19–508, slip op. (U.S. Apr.
22, 2021)), https://www.supremecourt.gov/opinions/20pdf/19-508_l6gn.pdf.
67 As of mid-2020, the FTC was a party to 56 Section 13(b) cases pending in Federal district
court. Brief for the Federal Trade Commission, AMG Capital Mgmt. LLC, et al., v. Fed. Trade
Comm’n, No. 19–508 (U.S. Nov. 30, 2020), https://www.supremecourt.gov/DocketPDF/19/19-
508/162011/20201130120930570_19-508bs.pdf.
68 Fed. Trade Comm’n v. Facebook, Inc., No 191–0134 (D.D.C.), https://www.ftc.gov/enforce-
ment/cases-proceedings/191-0134/facebook-inc-ftc-v.
69 Press Release, Fed. Trade Comm’n, FTC Sues Multi-Level Marketer Neora, formerly known
as Nerium, Alleging it Operates as an Illegal Pyramid Scheme (Nov. 1, 2019), https://
www.ftc.gov/news-events/press-releases/2019/11/ftc-sues-multi-level-marketer-neora-formerly-
known-nerium.
70 Press Release, Fed. Trade Comm’n, FTC Acts to Shut Down ‘Success by Health’ Instant Cof-
fee Pyramid Scheme (Jan. 16, 2020), https://www.ftc.gov/news-events/press-releases/2020/01/
ftc-acts-shut-down-success-health-instant-coffee-pyramid-scheme.
71 Press Release, Fed. Trade Comm’n, FTC, New York State Charge the Marketers of
Prevagen With Making Deceptive Memory, Cognitive Improvement Claims (Jan. 9, 2017),
https://www.ftc.gov/news-events/press-releases/2017/01/ftc-new-york-state-charge-marketers-
prevagen-making-deceptive.
72 Press Release, Fed. Trade Comm’n, FTC Seeks to Add Real Estate Inv. Celebrities Dean
Graziosi and Scott Yancey as Defendants in Real Estate Training Case (Aug. 31, 2020), https://
www.ftc.gov/news-events/press-releases/2020/08/ftc-seeks-add-real-estate-investment-celebrities-
dean-graziosi.
73 Fed. Trade Comm’n v. Shire ViroPharma, Inc., 917 F.3d 147 (3d Cir. 2019), https://
www2.ca3.uscourts.gov/opinarch/181807p.pdf.
74 COVID–19 Consumer Protection Act of the 2021 Consolidated Appropriations Act, Pub. L.
No. 116–260, 134 Stat. 1182, Division FF, Title XIV, § 1401.

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scams.75 Equipping the FTC with broad independent penalty authority would serve
as a valuable deterrent against deliberate, egregious violators that are using this
pandemic to take advantage of some of the most vulnerable populations in our soci-
ety.
The FTC has nationwide jurisdiction and an unparalleled view of the landscape.
It maintains data on millions of consumer complaints and has unique statutory au-
thority to operate across national borders.76 Even with its finite resources, the FTC
is able to undertake investigations and develop facts necessary to prove cases
against sophisticated corporate wrongdoers for large illegalities. But this is where
the agency’s efficacy ends. The FTC’s ability to hold offenders accountable for their
transgressions is sorely lacking.
Time and again, the FTC is forced to bring a second action against a lawbreaker
because the company found it economically advantageous to ignore the initial con-
sent agreement 77 or closing letter.78 Not only does this waste the FTC’s limited re-
sources but it ensures that illegal behavior continues to exploit consumers for longer
than is necessary. Until the FTC has broad, generic authority to turn on the penalty
switch in appropriate cases, companies will find it highly profitable to flout FTC
laws.
Further, penalties are a vital necessity in cases in which the precise economic
harm to consumers is difficult to measure. For example, penalty authority could
have a major impact on social media influencers, who are promoting false and dubi-
ous products and services during this pandemic and frequently do not disclose their
material connections to the brands they promote.79 TINA.org’s investigations of the

75 See Emma Fletcher, Income Scams: Big Promises, Big Losses, Consumer Protection Data
Spotlight, Dec. 10, 2020, https://www.ftc.gov/news-events/blogs/data-spotlight/2020/12/in-
come-scams-big-promises-big-losses.
76 Since January 2020, the FTC has received more than 450,000 pandemic-related consumer
reports. See FTC COVID–19 and Stimulus Reports, Consumer Sentinel Network Reports,
https://public.tableau.com/profile/federal.trade.commission#!/vizhome/COVID-
19andStimulusReports/Map (last visited Apr. 23, 2021).
77 Facebook entered into a consent agreement with the FTC in 2012 requiring the social media
platform to stop its illegal practice of disclosing unauthorized private, identifying user informa-
tion. See Decision and Order, In the Matter of Facebook, Inc., No. 19-cv-2184 (D.D.C. July 27,
2012), https://www.ftc.gov/sites/default/files/documents/cases/2012/08/120810facebookdo.
pdf. Unable to penalize Facebook for its transgressions, the FTC only obtained a promise that
Facebook would abide by the law going forward. As this reprimand was effectively toothless,
Facebook reverted to its deceptive privacy practices, requiring the FTC to file a complaint in
Federal court in 2019 to hold the platform accountable yet again for its failure to follow the
law and protect consumers’ privacy. See Complaint for Civil Penalties, Injunction, and Other Re-
lief, U.S.A. v. Facebook, Inc., No. 19-cv-2184 (D.D.C. July 24, 2019), available at https://
www.ftc.gov/system/files/documents/cases/182_3109_facebook_complaint_filed_7-24-19.pdf.
Only at this point, was the FTC able to punish Facebook with a $5 billion penalty. Had the
FTC been able to penalize Facebook initially, it is likely that consumer privacy rights would
have been better protected years earlier and Facebook less likely to flout the law. See also
Strengthening the Federal Trade Commission’s Authority to Protect Consumers: Hearing Before
the Comm. on Commerce, Science, and Transp., 117th Cong. 1–2 (2021) (statement of Rohit
Chopra, Comm’n, Fed. Trade Comm.), https://www.ftc.gov/system/files/documents/public
_statements/1589172/final_chopra_opening_statement_for_senate_commerce_committee_20210
420.pdf. (‘‘[Google]’s repeated law violations over the last decade were frequently met with favor-
able treatment from the FTC. . . . While the FTC is quick to bring down the hammer on small
businesses, companies like Google know that the FTC is simply not serious about holding them
accountable. Congress and Commissioners must turn the page on the FTC’s perceived powerless-
ness.’’)
78 In June 2018, the FTC sent a closing letter to Williams-Sonoma following an investigation
into the company’s marketing of certain Chinese-made products as ‘‘Crafted in America.’’ Fed.
Trade Comm’n Closing Letter to Williams-Sonoma, Inc. (June 13, 2018), https://www.ftc.gov/
system/files/documents/closing_letters/nid/musa_williams-sonoma_closing_letter.pdf. The FTC
did not pursue its investigation due to the company’s corrective actions and assurances that it
was an isolated error. This representation was false. Between April and May 2019, TINA.org
collected more than 800 examples of products that were marketed as made in the USA but were
either imported or made with imported materials. (Examples collected were drawn from seven
of Williams-Sonoma’s sites—Williams-Sonoma, Williams-Sonoma Home, Rejuvenation, Pottery
Barn, PBteen, Pottery Barn Kids and West Elm.) As a result of these findings, the FTC filed
an administrative action against Williams-Sonoma, which settled the charges for $1 million. De-
cision, In the Matter of Williams-Sonoma, Inc., No. C–4724 (F.T.C. July 13, 2020), https://
www.ftc.gov/system/files/documents/cases/2023025c4724williamssonomaorder.pdf. See also,
TINA.org’s Petition for Rulemaking to Promulgate Regulations for Made in the USA Claims,
https://www.truthinadvertising.org/wp-content/uploads/2019/08/TINA_org-Petition-for-Rule-
making-to-Promulgate-Regulations-for-Made-in-the-USA-Claims.pdf.
79 Laura Bradley, How Influencers Are Milking the Coronavirus for Clout—and Money, Daily
Beast, Mar. 22, 2020 (updated June 23, 2020), https://www.thedailybeast.com/how-influencers-
are-milking-the-coronavirus-for-clout-and-money.

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Kardashians,80 Ciroc,81 and influencers on Instagram who received FTC warning
letters 82 are illustrative of the problem. Additionally, Senator Blumenthal’s efforts
to curb dangerous and predatory social media marketing targeting children, such as
ads promoting detox teas, would benefit from broad FTC penalty authority.83 If com-
panies and influencers were exposed to monetary penalties each time a promotional
post failed to adequately disclose the material connection at issue, social media mar-
keters would be less likely to deceive consumers, many of whom are children and
young adults.84
Additionally, even where civil penalties are available for knowing violations of
trade regulation rules, the Commission is hamstrung in its efforts to pursue wrong-
doers.85 The requirement that the FTC refer a complaint for penalties to the Attor-
ney General only leads to harmful delays and a misallocation of scarce resources.
The current inefficient outsourcing of authority should be eliminated and the FTC
authorized to independently litigate civil penalties.
VI. The need for a civil penalty fund
The benefits of imposing penalties do not need to stop at deterring wrongdoers
from repeating illegal acts. If authorized, the FTC could use penalty funds to make
consumers who have been economically harmed monetarily whole again.
At present, FTC redress is limited to the amount of money it can obtain directly
from the wrongdoer(s). But because many defendants have the means and inclina-
tion to dissipate assets through lavish spending, bankruptcy protection, hiding
funds in inaccessible accounts/locations, or are otherwise insolvent, it is often the
case that consumers who have a right to redress receive pennies on the dollar, if
they receive anything.86 It is for this exact reason that other Federal agencies use
collected penalty funds to compensate victims, including the Consumer Financial
Protection Bureau’s Civil Penalty Fund 87 and the SEC’s Fair Fund.88
For the sake of providing complete and timely consumer redress, particularly now
when many in our country are in an economic freefall and consumers do not have
the luxury of time, the FTC should be authorized to establish such a consumer reim-

80 Kardashian/Jenner et al., Summary of Action, https://www.truthinadvertising.org/kardas
hian-summary-action/ (last visited Feb. 1, 2021).
81 Ciroc Summary of Action, https://www.truthinadvertising.org/ciroc-summary-action/ (last
visited Feb. 1, 2021).
82 Instagram Influencers Summary of Action, https://www.truthinadvertising.org/influencers-
ftc-complaint-summary-action/ (last visited Feb. 1, 2021).
83 Letter from Sen. Richard Blumenthal to the Honorable Joseph Simons, Chairman, Fed.
Trade Comm. (June 4, 2019), https://twitter.com/SenBlumenthal/status/1136059843285061
632.
84 Of course, any such legislation should give the FTC discretion so that nano-influencers and
micro-influencers with smaller followings are not treated the same as sophisticated, career
influencers who know their legal responsibilities.
85 See 15 U.S.C. Sec. 45(m)(1)(A).
86 See, e.g., Stipulated Order for Permanent Injunction and Monetary Judgment as to Defend-
ants Carey G. Howe, Anna C. Howe, Shunmin Hsu, Ruddy Palacios, and Oliver Pomazi, Fed.
Trade Comm’n v. Arete Financial Group, et al., No. 19-cv-2109 (C.D. Cal. Sept. 9, 2020), https://
www.ftc.gov/system/files/documents/cases/145_order_for_perm._inj._as_to_arete_defs_anna_
howe_2020-09-10.pdf (monetary judgment of $43.3 million partially suspended upon surrender
of at least $835,000 and additional assets). See also, Press Release, Operators of Student Debt
Relief Scheme Agrees to Pay at Least $835,000 to Settle FTC Allegations (Sept. 9, 2020),
https://www.ftc.gov/news-events/press-releases/2020/09/operators-student-debt-relief-scheme-
agree-pay-least-835000; Redacted Stipulated Order for Permanent Injunction and Monetary
Judgment as to Defendants Mark Gelvan, Outreach Calling, Inc., Outsource 3000, Inc., and Pro-
duction Consulting Corp., Fed. Trade Comm’n v. Outreach Calling Inc., et al., No. 20-cv-7505
(S.D.N.Y. Oct. 26, 2020), https://www.ftc.gov/system/files/documents/cases/de_42_-_redacted
_order_as_to_gelvan_and_corporations_entered.pdf (monetary judgment of $56,023,481, which is
partially suspended based on inability to pay.). See also, Press Release, FTC Joins Four States
in Action to Shut Down Alleged Sham Charity Funding Operation That Bilked Millions from
Consumers (Sept. 16, 2020), https://www.ftc.gov/news-events/press-releases/2020/09/ftc-joins-
four-states-to-shut-down-alleged-sham-charity-operation; Stipulated Order for Permanent Injunc-
tion and Monetary Judgment Against Vemma Nutrition Co. Vemma International Holdings, Inc.
and Benson K. Boreyko, Fed. Trade Comm’n v. Vemma, No. 15-cv-1578 (D. Ariz. Dec. 20, 2016),
https://www.ftc.gov/system/files/documents/cases/161222_vemma_273-stipulated_final_order_
redacted.pdf ($238 million judgment partially suspended upon payment of $470,136). See also,
Press Release, Vemma Agrees to Ban on Pyramid Scheme Practices to Settle FTC Charges
(Dec. 15, 2016), https://www.ftc.gov/news-events/press-releases/2016/12/vemma-agrees-ban-
pyramid-scheme-practices-settle-ftc-charges.
87 Civil Penalty Fund, Consumer Financial Protection Bureau, https://www.consumerfinance
.gov/enforcement/payments-harmed-consumers/civil-penalty-fund/ (last visited Feb. 1, 2021).
88 15 U.S.C. § 7246.

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bursement fund, rather than being required to arbitrarily deposit penalties in the
U.S. Treasury, as is the current practice.89
VII. Additional considerations to better protect consumers during the
pandemic
TINA.org would also like to highlight areas of law that may be strengthened to
better protect consumers during this pandemic.
a. APA rulemaking authority
The FTC’s Section 19 rulemaking authority is seriously hindered by unnecessary
roadblocks and hurdles imposed by the Magnuson-Moss Warranty Federal Trade
Commission Improvements Act.90 As Jessica Rich, former Director of the FTC’s Bu-
reau of Consumer Protection, noted in testimony focused on safeguarding American
consumers during this pandemic before the House Subcommittee on Consumer Pro-
tection and Commerce, ‘‘the rulemaking process set forth in Section 19 is highly
complex and elongated . . . As a result, most rulemakings under these procedures
have taken many years—nine in the case of both the Credit Practices and Used Car
Rules. . . .’’ 91
Further, Commissioner Rohit Chopra has noted that establishing FTC rules
through APA rulemaking authority would be much more efficient, and would be
more effective than litigating multiple cases on a similar subject matter. ‘‘For tax-
payers and market participants, the present value of net benefits through the pro-
mulgation of a clear rule that reduces the need for litigation is higher than pursuing
multiple, protracted matters through litigation.’’ 92 At the same time, APA rule-
making authority would enable the Commission to ‘‘establish rules through a trans-
parent and participatory process, ensuring that everyone who may be affected by
a new rule has the opportunity to weigh in on it.’’ 93
In short, the unnecessary hurdles imposed by Magnuson-Moss on the FTC’s rule-
making ability should be eliminated and the FTC should be allowed to use the Ad-
ministrative Procedure Act more broadly to establish necessary rules.
b. Require funeral homes to disclose their pricing online
More than 565,000 individuals in the United States have died of COVID–19.94
And the overwhelming grief of family members forced to lay their loved ones to rest
during this pandemic is exacerbated by the fact that funeral service providers are
not required to post their price lists on their websites. Funeral service providers
who advertise online should be required by law to post their price lists on their
websites in order to conform to consumers’ shopping behavior and allow consumers
to meaningfully price-shop from the comfort of their own homes before committing
to a purchase during such a difficult time.95
Not only are transactions in the funeral industry inherently fraught with emotion
and stress, they are also ones with which consumers tend to have little experience
or familiarity and ones that require making important and costly decisions under
tight time constraints. Moreover, such a law would also allow the FTC to more eas-
ily review funeral homes’ sales and business practices without imposing any signifi-
cant burden on the funeral service providers.96

89 See, e.g., Press Release, Fed. Trade Comm’n, FTC Brings First-Ever Cases Under the BOTS
Act (Jan. 22, 2021), https://www.ftc.gov/news-events/press-releases/2021/01/ftc-brings-first-
ever-cases-under-bots-act.
90 Magnuson-Moss Warranty—Federal Trade Commission Improvements Act, Pub. L. No. 93–
637, 88 Stat. 2183 (1975) (codified at 15 U.S.C. §§ 2301–2312 (2012).
91 Safeguarding American Consumers: Fighting Fraud and Scams During the Pandemic: Hear-
ing Before Subcomm. On Consumer Protection and Commerce of the Comm. on Energy and
Commerce, 117th Cong. 6 (2021) (statement of Jessica L. Rich, Distinguished Fellow, Inst. Of
Technology Law and Policy, Georgetown University Law Center), https://docs.house.gov/meet-
ings/IF/IF17/20210204/111139/HHRG-117-IF17-Wstate-RichJ-20210204.pdf.
92 Comment of Fed. Trade Comm’n Rohit Chopra, Hearing #1 on Competition and Consumer
Protection in the 21st Century (Sept. 6, 2018), https://www.ftc.gov/system/files/documents/
public_statements/1408196/chopra_-_comment_to_hearing_1_9-6-18.pdf.
93 Id.
94 Coronavirus Cases Are Rising Again. See How Your State is Doing, NPR, Apr. 22, 2021,
https://www.npr.org/sections/health-shots/2020/09/01/816707182/map-tracking-the-spread-
of-the-coronavirus-in-the-u-s.
95 Such a rule would also align with stay-at-home recommendations during the COVID–19
outbreak. See also TINA.org’s Funeral Rule Comment, https://www.truthinadvertising.org/wp-
content/uploads/2020/06/TINA-Funeral-Rule-Comment.pdf.
96 See FTC’s Media Resources for the Funeral Rule, https://www.ftc.gov/news-events/media-
resources/truth-advertising/funeral-rule (last visited Feb. 1, 2021).

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c. Require companies that use negative-option offers to simplify cancelation and
provide clearer renewal information
As U.S. consumers shelter at home during this pandemic, many are turning to
online shopping for their purchasing needs—from PPE to toilet paper to grocery
items and medication. Inevitably, some are also unintentionally enrolling in un-
wanted negative-option offers that siphon money off of already strained budgets.97
Unfortunately, deceptive negative-option offers have become a multibillion-dollar in-
dustry. On a regular basis, consumers find that they have been charged for long-
forgotten subscriptions,98 or that they are unable to cancel a trial before being
charged. Indeed, losses relating to such offers in just 14 cases the FTC pursued over
the past decade have totaled more than $1 billion.99
Companies that use negative-option offers should be required to (1) permit con-
sumer cancelation of negation options in an easy and specific manner—at minimum,
if the subscription was entered into online, then it should be able to be canceled
online,100 (2) provide timely reminders to consumers before recurring charges are
initiated,101 and (3) notify consumers of any material changes to the terms of a sub-
scription and provide an opportunity to cancel the subscription before the terms go
into effect.102
Moreover, legislation that prohibits marketers from surreptitiously tying ‘‘free’’
trial offers to future, ongoing charges would be beneficial. TINA.org continually re-
ceives complaints from consumers who report being charged repeatedly after signing
up for what they thought was a free trial offer.103 Unless further action is taken
to protect consumers, the trend of consumers being unwittingly trapped in deceptive
trial offers and automatically renewing subscriptions will only grow.
d. Exclude Section 230 of the Communications Decency Act protection for commercial
speech
When Section 230 of the Communications Decency Act was enacted in 1996, nei-
ther Google nor Facebook existed and Amazon had just arrived on the scene as an
online bookseller. The law was enacted to protect young Internet service providers
at a time when the Internet was just beginning to gain popularity;104 protecting

97 Consumer complaints (very often from senior citizens) concerning negative-option offers are
one of the most common types of complaints that TINA.org receives. Consumers generally com-
plain about unwittingly being enrolled in a negative-option plan and then finding it impossible
to cancel the subscription.
98 This issue is likely exacerbated, in part, by increasing rates of digitization: without a phys-
ical item, like a book, arriving in the mail, or paying by writing a check, the only indication
a consumer may have of a long-forgotten, converted subscription is an ambiguously labelled, re-
curring charge on their credit card. See Sophia Wang, One Size Does Not Fit All: The Short-
comings of Current Negative Option Legislation, 26 Cornell J. L. & Pub. Pol’y 197, 200 (Fall
2016).
99 See Subscription Traps and Deceptive Free Trials Scam Millions with Misleading Ads and
Fake Celebrity Endorsements, Better Business Bureau, 2 (Dec. 2018), https://www.bbb.org/
globalassets/local-bbbs/council-113/media/bbb-study-free-trial-offers-and-subscription-traps.pdf.
100 ROSCA mandates only that, for goods and services offered on the internet, there be ‘‘simple
mechanisms for a consumer to stop recurring charges,’’ but provides no specifics and no require-
ment that cancelation be online. See 15 U.S.C. § 8403(3).
101 When consumers relinquish control, they incur the additional burden of tracking their var-
ious subscriptions. If a consumer forgets about an expiring trial or a recurring charge, it can
result in an inefficient allocation of consumer resources. Indeed, 48 percent of consumers have
had a free trial convert to a paid subscription without realizing it. See Brady Porche, Poll: Re-
curring charges are easy to start, hard to get out of, Creditcards.com (Aug. 22, 2017), https://
www.creditcards.com/credit-card-news/autopay-poll.php.
102 See TINA.org’s Comment to the FTC regarding Negative Option Offer Rule, https://
www.truthinadvertising.org/wp-content/uploads/2019/12/12_2_19-comment-to-FTC-re-NOO-
Rule.pdf.
103 Between 2015 and 2017, consumer complaints about free trials more than doubled in the
U.S. Over that same span, the Better Business Bureau identified nearly 37,000 complaints—
the average loss being $186. The FBI’s Internet Crime Complaint Center also recorded a rise
in complaints about free trial offers between 2015 and 2017, with losses totaling more than $15
million over that time span. Corresponding with this consumer dissatisfaction, more than 100
Federal class actions have been filed on behalf of U.S. consumers complaining about various
negative option terms and conditions since 2014. And during this same time period, the FTC
has brought 23 cases under ROSCA and pursued at least 5 cases against payment processors
linked to deceptive negative option and free trial offers. See TINA.org’s Comment to the FTC
regarding Negative Option Offer Rule, https://www.truthinadvertising.org/wp-content/uploads
/2019/12/12_2_19-comment-to-FTC-re-NOO-Rule.pdf.
104 U.S. Dep’t of Justice, Section 230—Nurturing Innovation or Fostering Unaccountability?:
Key Takeaways and Recommendations (June 2020), https://www.justice.gov/file/1286331/
download.

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multibillion-dollar companies from liability for deceptive marketing statements
made about products sold on their websites and from which they profit was not on
the agenda.
However, fast-forward 25 years, and that is exactly what Amazon, Google and oth-
ers argue—that Section 230 shields them from liability for the deceptive marketing
statements that lure consumers to purchase bogus products sold on their websites
by third parties and from which these shopping platforms turn a handsome profit.
Such unfettered impunity has led to widespread deceptive marketing issues online,
issues that will continue to multiply at an unprecedented rate as consumers pivot
to online shopping as a result of the COVID–19 pandemic.105
By way of example, a TINA.org investigation found that Amazon actively pro-
motes and profits from more than 100 deceptively marketed brain supplements pri-
marily sold to senior citizens on its website.106 Amazon is not just turning a blind
eye to claims that these unproven products improve memory, among other pur-
ported health benefits, it is actively promoting these claims by independently pub-
lishing its own marketing content to amplify the deceptive marketing messages of
third-parties.107
Similarly, a TINA.org investigation found that eBay was promoting more than
two dozen eBay sellers spanning 45 listings that falsely claimed their face masks
were ‘‘FDA approved’’ and/or illegally used the FDA’s logo to boost sales of their
products.108 eBay was not only allowing the sale of these falsely marketed face
masks, it was also giving some items greater exposure by listing them as ‘‘spon-
sored’’ or ‘‘promoted products’’ in exchange for a fee.
To date, online department stores like Amazon and eBay have largely succeeded
in fending off all attempts to hold them accountable for false and deceptive commer-
cial speech on their websites using Section 230 as their impenetrable defense
shield.109 Removing this bulwark from online commercial speech would allow the
FTC to hold online stores to the same legal standards as brick and mortar stores,
and ensure that online websites are held accountable for the deceptive marketing
they promote and profit from.
VIII. Conclusion
Deceptive marketing and similar forms of commercial dishonesty are a scourge of
the American economy, inflicting billions of dollars in losses to cheated consumers
and distorting the efficient allocation of resources, rewarding those who hone inge-
nious frauds and punishing honest competitors. Many of the deceptive marketing
schemes and frauds exploiting the COVID–19 pandemic go well beyond inflicting
economic injuries—they result in physical harm and, in some instances, even death.
Consumers are foregoing appropriate preventative measures and medically advan-
tageous treatments for useless products that are falsely marketed. At this juncture,
there is a real risk that the deceptive marketing practices enumerated today will
only multiple as the agency primarily charged with policing these deceptive acts and
practices, the FTC, lacks the necessary authority to claw back ill-gotten gains, pun-
ish egregious wrongdoers and fully reimburse victims of fraud.
TINA.org looks forward to working with the Subcommittee and Congress to ad-
dress the issues articulated above, and I would be happy to answer your questions.

105 United Nations Conference on Trade Dev., COVID–19 has changed online shopping forever,
survey shows (Oct. 8, 2020), https://unctad.org/news/covid-19-has-changed-online-shopping-for-
ever-survey-shows; Press Release, Research and Mkts., COVID–19 Impact on e-Commerce & On-
line Payments Worldwide, 2020—Online Shopper Penetration Increases During the Pandemic
(May 29, 2020), https://www.globenewswire.com/news-release/2020/05/29/2040716/0/en/
COVID-19-Impact-on-e-Commerce-Online-Payments-Worldwide-2020-Online-Shopper-Penetra-
tion-Increases-During-the-Pandemic.html.
106 How Amazon Promotes, Profits from Deceptively Marketed Brain Supplements, Truth In
Advertising, Inc., Jan. 16, 2020, https://www.truthinadvertising.org/how-amazon-promotes-prof-
its-from-deceptively-marketed-brain-supplements/.
107 Deceptive health claims are given increased visibility on the website through sponsored
search results, designations such as ‘‘Amazon’s Choice’’ and ‘‘Editorial recommendations,’’ star
ratings, and other Amazon-specific marketing materials. Amazon also plays an important role
in the processing of many of these deceptively marketed brain supplements, collecting customer
shipping information, fulfilling orders and even gift-wrapping some items when requested.
108 Face Mask Sellers on eBay Falsely Claim Products are ‘FDA Approved’, Truth In Adver-
tising, Inc., May 13, 2020, https://www.truthinadvertising.org/face-mask-sellers-on-ebay-falsely-
claim-products-are-fda-approved/.
109 A push has begun to remove certain elements of Section 230 protection from online com-
mercial speech. For example, the Country of Origin Labeling Online Act, or COOL Act (S. 3707),
which sought to require clear disclosure of seller location and country-of-origin labeling for prod-
ucts advertised online, was introduced in the 116th Congress.

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Senator BLUMENTHAL. Thank you very much, Ms. Patten. Thank
you for that excellent description of the explosion that we’re seeing
in frauds and the vulnerability and lack of enforcement that will
result from the 13B decision by the Supreme Court which could
eviscerate large areas of enforcement and that challenge to us in
Congress has been highlighted by Mr. Kaufman and Mr. Kovacic,
as well, and certainly it ought to be at the top of our priorities as
we consider this crisis.
Ironically, the increasing hope resulting from the vaccines has
only accelerated the frauds that we’re seeing. In fact, swindlers
have stolen money from senior citizens by promising them at-home
vaccinations. There have been pitches to schedule vaccination ap-
pointments and checkups. Committing identity theft and counter-
feit vaccination cards and fake negative results of tests are increas-
ing online.
So the challenge is not diminishing with our ability to potentially
conquer the pandemic through increased vaccinations and you
mentioned, Ms. Patten, the 350 warnings that the FTC has di-
rected to companies to remove deceptive claims.
Mr. Kaufman, let’s be very blunt. These warnings are just a slap
on the wrist. So far the FTC has brought only one case under the
COVID–19 Consumer Protection Act, and I hope that will be a
start in increasing vigor by the FTC.
I agree totally that we need to increase the resources available
to the FTC, as Mr. Kovacic has emphasized. The President is ap-
parently going to seek an $80 billion increase for the IRS. I would
suggest something comparable for the FTC in the way of resources.
But what plans does the FTC have to use increased penalties
and criminal referrals?
Mr. KAUFMAN. Thank you for the question, Senator.
We have more cases in the pipeline that will be utilizing the new
civil penalty authority that Congress has given us. We think it’s a
very important tool that we definitely will be utilizing.
I also do want to mention that the 350 companies that received
warning letters, we’re watching them closely to make sure that
they don’t recur and if they do, we will also be bringing law en-
forcement against them, as well.
Senator BLUMENTHAL. But if those warning letters and the scru-
tiny are just the cost of doing business, it won’t be a deterrent to
them. Criminal referrals and increased penalties are what will put
them out of business.
Mr. KAUFMAN. I do agree. Increased criminal referral is some-
thing we do. We have a unit at the FTC, the Criminal Liaison
Unit, that works with criminal law enforcement throughout the
country to get them interested in our cases and that’s something
that we can and should do more of.
Senator BLUMENTHAL. Let me turn to the social media platforms.
We’ve all seen the fake cures, the fake PPE, now fake vaccination
cards.
Right now for these platforms, there’s no cost to inaction. They
seem to pay attention only when Congress or the state AGs thor-
oughly kick them in the butt and often it takes multiple kicks in
the butt.

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Let me ask Ms. Patten and Mr. Kovacic. What changes should
we make in the Section 230 immunity that right now these plat-
forms enjoy?
Ms. PATTEN. Well, I think that 230 definitely needs some fixing.
Tina.org’s position is that platforms that profit from the goods and
services that they are deceptively marketing should not be able to
hide behind that 230 immunity, such that the fix that’s needed is
that if it deals with commercial speech in which a platform is mak-
ing money that they should not be able to use 230 at all.
Senator BLUMENTHAL. Professor Kovacic?
Mr. KOVACIC. Thank you, Mr. Chairman.
I don’t know if it’s simply in the context of Section 230, but I
think it’s appropriate through perhaps a variety of different legal
steps to bring responsibility to bear on the intermediaries who are
aware or should be aware of the falsity of claims that are being
made to exercise care in denying the use of their platforms to those
who make these kinds of claims.
I’m not sure if 230 is the only specific vehicle to use. I haven’t
spent much of my work studying that carefully, but I can think of
other legal concepts and principles where we bring responsibility to
bear on third parties who know or should know that the conduct
taking place through the medium or vehicle that they control is
fraudulent and situating responsibility with the individual or insti-
tution that’s in a position to control the behavior that’s aware that
there’s serious harm that can flow from the behavior, I think it’s
entirely appropriate, and I expect that you and your colleagues will
be looking at a number of different ways in which this kind of re-
sponsibility can be brought to bear on a variety of different actors,
including information platforms.
Senator BLUMENTHAL. Thanks, Professor Kovacic.
Senator Blackburn.
Senator BLACKBURN. Thank you, Mr. Chairman.
I find it so interesting Section 230 comes up in so many different
arenas. So thank you all for that.
Mr. Rhodes, I want to come to you first. I appreciate your com-
ment about pandemic profiteers and thought that was an artful
term and really a very fitting way to kind of couch some of what
we’ve seen taking place online, and we know this wasn’t—pardon
me—our first pandemic. It will not be the last, and so education,
consumer education is a big part of this responsibility.
So I wish you would talk for just a minute about how you all as
a corporate entity—pardon me—view your responsibility to educate
people on how to detect something that is an actual real item, au-
thentic, and something that’s a fake. Mr. Rhodes, yes, thank you.
Mr. RHODES. Thank you very much for the question, Ranking
Member Blackburn.
So early on in the pandemic, our Chairman of the Board and
CEO Mike Roman said 3M has a unique responsibility to respond
to the pandemic from all angles as a leading supplier of personal
protective equipment, including N95 respirators.
We have taken that responsibility and those words to heart and
that includes helping to do what we can to ensure that brave front-
line workers get genuine products at a fair price and part of that
is educating, you know, both the public and procurement officials

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as to what we’re seeing in the marketplace, what we’re going after
by way of frauds and scams and counterfeits and the like.
So, you know, part of our activities have involved not only put-
ting information on our website. We posted tips on how to spot
fraudulent offers. You know, typically characterized by get the
money upfront and then disappear before the buyer realizes there’s
no product. Those involve upfront payments, payments into escrow
that the seller pays into and the—I’m sorry—the buyer pays into
and the seller can access, and other——
Senator BLACKBURN. OK. So, sir, I want to interrupt you right
there. So you are conducting education to both the individual con-
sumer and also to purchasing agents, is that correct?
Mr. RHODES. That’s correct.
Senator BLACKBURN. OK.
Mr. RHODES. We have——
Senator BLACKBURN. All right. Let me move on. My time—yes.
My time is limited. I want to move on.
OK. So, Mr. Kaufman, when you all are trying to go through
your enforcement, what kind of participation are you getting from
the online marketplace, from vendors that have third parties that
are selling?
Mr. KAUFMAN. So the answer would be twofold. When we see bad
claims, in addition to reaching out to the party that’s involved in
the bad claims, we are also contacting the platforms to make sure
that they’re aware that there’s bad activity on their platform.
Senator BLACKBURN. And do they respond appropriately?
Mr. KAUFMAN. They have responded appropriately, but I wish
they would respond more without being invited to respond by the
FTC.
Senator BLACKBURN. OK. Do they come to you with due diligence
or information on their own? We think we have someone who needs
to be investigated.
Mr. KAUFMAN. We get occasional referrals from platforms and
from companies, as well.
Senator BLACKBURN. OK. All right. And, Professor Kovacic, I
want to come to you on this. I know you’re going to tell me you
need more budget and staff. That’s going to be a part of your an-
swer. And Mr. Kaufman, to you.
When we look at what the FTC is doing, one of the things that
we have discussed for a couple of years now is the need to scale
enforcement. So as you look at this, other than budget and agents,
what kind of authorities do you need? Mr. Kaufman, you first, and
then Professor Kovacic.
Mr. KAUFMAN. So certainly the most pressing issue right now is
restoring our 13B authority.
Senator BLACKBURN. OK.
Mr. KAUFMAN. Without that, that authority is a huge, huge blow
to the FTC, and there are other areas. We can definitely use civil
penalty authority. Most notably, data security and privacy viola-
tions, to be able to penalize first-time privacy violators would be a
huge benefit for consumers and for the agency.
Senator BLACKBURN. OK. Professor?
Mr. KOVACIC. I would echo Daniel’s comments, put those on my
list, as well.

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I’d simply add I would like to see the development of a com-
prehensive strategy that brings together the full community of law
enforcement authorities to decide in a more collective way what are
we doing now and what do we have to do to be more effective. I
think that would be very profitable. A way to make sure we got the
full value for the additional expenditures.
Senator BLACKBURN. Thank you. Thank you, Mr. Chairman.
Senator BLUMENTHAL. Thanks, Senator Blackburn.
Senator Klobuchar.
STATEMENT OF HON. AMY KLOBUCHAR,
U.S. SENATOR FROM MINNESOTA
Senator KLOBUCHAR. Thank you very much. Thank you to all our
witnesses. Welcome to Mr. Rhodes from 3M, a company in my
home state, and good to see you again, Mr. Rhodes. Thank you to
the Chairman and to the Ranking Member for holding this really
important hearing. It couldn’t come at a more important time, as
you point out with the Supreme Court decision with 13B.
Mr. Kaufman, in your testimony you highlight that the FTC has
sent out more than 350 warning letters directing companies to re-
move deceptive claims from fake coronavirus treatments to ads for
products that were never delivered.
How do these companies react to these warning tools and why
is 13B so important?
Mr. KAUFMAN. So the companies, to their credit, to the extent
that we want to give them credit, have been very responsive. The
response has been overwhelmingly positive and within 48 hours the
claims are removed. So it has been highly successful from that per-
spective.
But in terms of 13B, there is a lot of litigation we have ongoing
that relies solely upon 13B for monetary relief. So rather than get-
ting millions and millions or tens of millions of dollars for con-
sumers, we will be stuck getting nothing if there’s no congressional
fix to 13B.
Senator KLOBUCHAR. And do you have any sense of how much
money could be at stake, a range? I know you can’t put an exact
dollar figure.
Mr. KAUFMAN. So, well, for the past 5 years, we’ve given back
$11 billion with a B back to consumers. So I would estimate it’s
certainly hundreds of millions per year. That seems to be a fairly
conservative estimate.
Senator KLOBUCHAR. Mm-hmm. And that’s going forward, of
course, too, not just going back.
Mr. KAUFMAN. Correct.
Senator KLOBUCHAR. And because of the pandemic and some of
this fraud that’s going on that we’ve identified, is it possible you’d
even have more than usual?
Mr. KAUFMAN. It is certainly possible. We are always looking for
the cases that cause the most harm to consumers.
Senator KLOBUCHAR. OK. Very good. And, Professor Kovacic,
thank you for joining us again.
You recommend a significant increase in the FTC budget in your
testimony. I agree with that. You know, Senator Grassley and I
have this bill, the Merger Filing Fee Modernization Act, which time

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has come. It would not be everything. A lot of what you’re talking
about, I think could be long in the appropriations process, but what
this would do would increase the budget of each of the FTC and
the Antitrust Division by $67.5 million and it’s paid for actually in
this case not by taxpayer money but by an increase merger filing
fee on the biggest deal. It actually helps some of the smaller deals.
And I call for even more, of course, of $300 million increase to
the FTC budget in the appropriations process, but you go even far-
ther. Could you talk about why this is so important at this moment
of time not just from the pandemic fraud cases you’re seeing but
also from what you’re seeing with those antitrust cases?
I think it’s so important that the FTC under Chairman Simon
brought the Facebook case, but I bet that you could use nearly all
the personnel in the FTC to work on those cases and then we’d
have no one left for anything else. So could you talk about the im-
portance of this increase in budget?
Mr. KOVACIC. Yes. Thank you, Senator Klobuchar.
I’m thinking from my perspective as someone who started his ca-
reer at the FTC in the 1970s and I have watched since the efforts
of our public institutions to do expansive ambitious things with
modest resources, and I think as a starting point as a nation, we
have to realize that if we want the equivalent of superior results,
we’ve been talking for the last couple of years about the equivalent
of a public policy moon shot, to put competition law in a much dif-
ferent place, consumer protection in a much different place.
We look at our experience that with NASA, that was expensive
but it was worth it, arguably, and I think to have the conversation
that says it is worth it for our Nation to spend what it takes not
just in aggregate numbers but to recruit and retain the personnel
that we’re going to need to drive these programs home successfully.
Senator KLOBUCHAR. Thank you.
Mr. KOVACIC. And I think if we’re not willing to spend more and
suppose we don’t triple the agency’s budget, if we don’t take the
steps that you have suggested, step by step, I think we’re going to
find ourselves in a chronic position that we do in public policy
where we have grand policy aspirations and we scratch our heads
and say why isn’t it working?
Senator KLOBUCHAR. OK.
Mr. KOVACIC. In part, it’s not working because we’re not willing
to pay for it.
Senator KLOBUCHAR. Thank you. Mr. Rhodes, hometown com-
pany. In your testimony, you note that 3M partnered with the U.S.
Department of Homeland Security to help seize approximately 11
million counterfeit 3M N95 masks and in January 3M helped Min-
nesota avoid buying nearly 500,000 counterfeit N95 masks from a
fraudulent vendor.
Can you speak to the important role of public/private partner-
ships in combating fraud?
Mr. RHODES. Yes, thank you for the question, Senator Klobuchar.
That has been an integral part of our efforts from the beginning
in processing those 13,800 reports. Forming close partnerships with
law enforcement and with agencies has really allowed us to extend
beyond what we can do with our civil litigation authority and the
opening comments I thought were spot on that the criminal en-

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forcement really helps to make the difference to stop the bad actors
and so that’s been a critical part of our efforts from beginning last
March when we sent a letter to the Department of Justice, to the
National Association of Attorney Generals, the National Governors
Association, reaching out.
We conducted briefings, formed working relationships with the
DOJ Task Force, with Department of Homeland Security, Home-
land Security Investigations and their National IPR Center, as well
as Customs and Border Protection, and those have really been
among the most effective steps that we’ve been able to take.
Senator KLOBUCHAR. Thank you. Thank you.
And just last, I’ll just put this one on the record since my col-
leagues are waiting to ask questions, but, Ms. Patten, thank you
for your work and I will say Senator Luján and I have done a letter
after a hearing that he conducted on misinformation on vaccines
and I’ll follow up with you on this but just some astounding find-
ings that maybe if we could take 12 accounts down or get the social
media companies to do it, we would be in a lot better place.
So thank you.
Senator BLUMENTHAL. Thanks, Senator Klobuchar, and thanks
for your very thoughtful book which deals with many of these top-
ics.
Senator KLOBUCHAR. Thank you.
Senator BLUMENTHAL. Senator Thune.

STATEMENT OF HON. JOHN THUNE,
U.S. SENATOR FROM SOUTH DAKOTA
Senator THUNE. Thank you, Mr. Chairman.
Mr. Kaufman, following the enactment of the TRACE Act in De-
cember 2019, the FTC’s seen a drop in robocall complaints.
Could you elaborate on some of the FTC’s recent robocall enforce-
ment actions?
Mr. KAUFMAN. Sure. We are engaging quite a lot with the FTC
and with DOJ on a number of robocall issues. We’ve got several
cases in litigation and we have a lot of cases in the pipeline that
will be challenging that robocall conduct. So it’s an area we are
very actively involved in.
Senator THUNE. Could you speak to the FTC’s efforts on engag-
ing on that issue with industry initiatives, like the Robocall
Traceback Group, and whether this public/private partnership has
been successful in identifying illegal robocallers?
Mr. KAUFMAN. Absolutely. It’s been a very successful partner-
ship. It’s been a robust source of leads and helpful information to
allow us to build successful law enforcement actions. So it’s highly
successful.
Senator THUNE. OK. Good. Justice Breyer’s opinion last week re-
garding the FTC’s authority to seek equitable relief cited the Safe
Data Act which is comprehensive privacy legislation I’ve sponsored
with Senators Wicker, Fischer, and Blackburn as an example of
Congress considering providing for a fix to the gap in the FTC’s
13B authority.
Mr. Kaufman, in your view, would this particular provision be
helpful to the FTC after the Supreme Court’s unanimous ruling

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that the FTC could no longer secure consumer redress in Federal
courts under the FTC’s 13B authority?
Mr. KAUFMAN. Absolutely. We really do appreciate the inclusion
of 13B reform in the Safe Data Act and very much are very sup-
portive and think it’s a very important thing for Congress to take
up.
Senator THUNE. Mr. Rhodes, I appreciate all the work that 3M
has done throughout the pandemic to increase its production of
PPE, to support individuals and frontline workers.
In fact, last November I had the opportunity to visit 3M’s manu-
facturing facility in Aberdeen, South Dakota, and see the expansion
of 3M’s N95 mask production lines. At the same time you were in-
creasing your manufacturing capabilities, scammers were trying to
exploit the pandemic by offering a number of fraudulent products.
What steps did 3M take to combat fraudulent activity during the
pandemic, and can you talk about your partnership with law en-
forcement officials when identifying fraud?
Mr. RHODES. Yes, thank you for the question, Senator Thune.
So our efforts to address the pandemic really started with getting
information out there. We established our website, our fraud hot-
lines to both allow customers to verify the offers of product were
authentic and from authorized 3M distributors.
We put online information about how to spot fraud in all of its
forms, how to spot counterfeits. We published the list prices for our
commonly sold N95 respirators so that customers could identify
and avoid inflated pricing.
At the same time, once we established intakes for reports of sus-
pected fraud, we reached out, as I mentioned, to the Department
of Justice, to state AGs’ offices, to DHS, to CBP, to the FBI, and
started a process of sharing information, of referring reports. We’ve
referred thousands of reports which has really extended the reach
and effectiveness of our actions.
We’ve also brought our own actions in 33 lawsuits in courts
across the country and we’ve been very successful in stopping the
unlawful activity and we’ve donated all of our recoveries in those
cases, monetary recoveries to COVID–19-related charities.
We’ve also partnered with online retailers, Internet companies to
take down tens of thousands of false or deceptive product listings,
social media posts, websites, and so it’s been really a case of ad-
dressing fraud, price gouging, and counterfeiting from all angles.
Senator THUNE. Mr. Kaufman, there have been a number of dis-
cussions around vaccine passports since the Biden Administration
took office. Vaccination is key to ending this pandemic, but the idea
that a vaccine passport or lack thereof could be used to track or
restrict Americans’ movement is concerning.
I understand several technology companies have been working to
develop visual tools or passports which may be appealing to con-
sumers as they seek ways to facilitate their return to normal activi-
ties and while convenient to the consumer, I am concerned about
the privacy and security of that health data that the consumer may
opt to provide these companies.
Has the FTC taken steps to conduct oversight of the privacy im-
plications of digital vaccine passports?

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Mr. KAUFMAN. At the moment, we have not done anything pub-
licly about it, but it is an issue that we are very concerned about.
Obviously there are enormous implications involving vaccines and
privacy issues.
We’ve also been active in a lot of other health privacy areas. We
brought a recent case flow involving an online telehealth app that
collected a lot of information from hundreds of millions of people.
So the issue of health and apps is an area we’re very focused on
and I think you raise a very important issue that we will be look-
ing at.
Senator THUNE. OK. Good. I’m glad you’re going to be looking at
it.
Thank you, Mr. Chairman.
Senator BLUMENTHAL. Thanks, Senator Thune.
And now Senator Markey.

STATEMENT OF HON. EDWARD MARKEY,
U.S. SENATOR FROM MASSACHUSETTS
Senator MARKEY. Thank you very much, Mr. Chairman. Thank
you for holding this very important hearing.
A year ago, I sent a letter to the Federal Trade Commission urg-
ing it to develop and implement a comprehensive plan to stop bad
actors from preying on innocent consumers with COVID-related
scams and price gouging.
Since then, the Commission has taken a number of important
steps to stop this type of behavior, including issuing warning let-
ters and charging a scammer who deceptively marketed a fake
COVID treatment, but there is so much more that needs to be
done.
The Commission also needs to address consumer protection
threats that have indirectly arisen as a result of the pandemic.
Specifically, we need to stop websites that are taking advantage of
kids who are online and on their devices more than ever during the
period of distance learning.
I recently sent a letter to the Federal Trade Commission urging
it to investigate whether Google violated Section 5 of the Federal
Trade Commission Act by misleadingly marketing children’s apps
as compliant with the Children’s Online Privacy Protection Act, a
law which I authored, despite evidence that many of those apps ap-
pear to illegally track children and share their personal informa-
tion without consent.
Mr. Kaufman, as children’s time online skyrockets during this
pandemic, is the Federal Trade Commission committed to cracking
down on platforms that are unfairly manipulating kids and deceiv-
ing parents while they do it?
Mr. KAUFMAN. Absolutely. I agree very much with you. What has
happened from the pandemic, everybody has gone online and pri-
vacy and security issues have really been magnified by the move-
ment of everything online.
So we are very familiar with your letter. I can’t comment on a
specific investigation but issues of children’s privacy are very im-
portant to myself, to my bureau, and to our Acting Chairman.
Senator MARKEY. OK. Great. Thank you.

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Last week, the Supreme Court stripped the Federal Trade Com-
mission of its ability to obtain monetary relief for victims of scams
under Section 13(b) of the Federal Trade Commission Act. Under
this ruling, the Federal Trade Commission will operate without its
primary tool for compensating cheated consumers.
The Supreme Court’s decision was nothing short of a gut punch
to the Federal Trade Commission and to the consumers which it
serves.
I look forward to working with Chair Cantwell and Sub-
committee Chair Blumenthal and all of my colleagues on this com-
mittee to quickly enact legislation that restores the Federal Trade
Commission’s rightful authority under Section 13(b) but until Con-
gress acts, it is imperative that the Federal Trade Commission uses
its full authority to deter bad actors from engaging in illegal activ-
ity. We need to stop these scams before they happen.
Federal Trade Commissioner Chopra has proposed that one way
the Federal Trade Commission can deter harmful behavior is by
using the Commission’s Penalty Offense Authority. Under the Fed-
eral Trade Commission Act, if the Commission formally condemns
a particular illegal practice in one case, other companies then who
knowingly engage in the same practice can face big fines.
As an example, when a company recently posted fake positive re-
views that tricked consumers into buying its products, the Federal
Trade Commission issued an Order condemning that practice.
Using its Penalty Offense Authority, the FTC could potentially now
issue serious fines against any company that knowingly defies the
Federal Trade Commission by posting fake reviews for their own
products.
In other words, using Penalty Offense Authority, the Federal
Trade Commission could potentially put whole industries on notice
and hit companies where it hurts if they scam consumers.
Mr. Kaufman, what are your thoughts on this approach, and is
the Federal Trade Commission currently inventorying existing Or-
ders to see if it can use them to collect civil penalties from scam
artists who are operating today?
Mr. KAUFMAN. The Penalty Offense Authority is one of the addi-
tional tools that we are very closely looking at to make sure we can
do everything we can in our power to protect consumers, despite
the loss of 13B.
One issue I have with that authority is that it gives you pen-
alties. You know, at the FTC, one of our first priorities, we want
to stop the bad conduct and get money back to consumers. Penalty
Authority doesn’t allow us to do that, but it is a good alternative,
given the unfortunate decision of the Supreme Court last week.
Senator MARKEY. Thank you, Mr. Kaufman.
Mr. Kaufman, again, I just wish that the FTC now would use the
penumbra of the authority of the Federal Trade Commission Act to
protect consumers wherever possible while simultaneously I realize
that it’s imperative that we pass legislation for more power of the
FTC to ensure that it can get money back for consumers who have
been bilked, and I’m looking forward to working with Chairman
Blumenthal and Chair Maria Cantwell in order to accomplish that
goal.
Thank you.

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Senator BLUMENTHAL. Thanks, Senator Markey. Thanks for
those excellent comments.
And now Senator Luján. We may be having technical difficulties
with Senator Luján.
While we’re waiting, let me ask a question. I think it’s pretty
clear from the testimony that we’ve heard today and everything we
know about the FTC that the Supreme Court decision really is an
existential threat to the FTC and to consumers and if we do noth-
ing else in this subcommittee, we need to reauthorize the FTC’s au-
thority to protect consumers and put money back in their pockets.
That’s essentially what 13B enables the FTC to do, put money back
into consumers’ pockets for their losses.
The money that results from penalties goes to the Federal Gov-
ernment, not to consumers. It’s a deterrent. It’s a good means of
punishment, but consumers see none of it.
Let me ask Assistant Attorney General Alexander because you
are doing what I did for 20 years as Attorney General of the State
of Connecticut, which is to put money back in consumers’ pockets.
Could the state attorneys general fill some of the gap left by the
Supreme Court’s decision in restricting FTC authority to provide
restitution if the FTC were to share more of its cases, to refer more
of them, and perhaps even for you to seek criminal penalties if the
FTC fails to do so?
Ms. ALEXANDER. Thank you for the question, Senator.
Yes, I mean, the states do have restitution authority. Our state
in Washington, our courts give us very broad equitable restitu-
tion—give the courts very broad equitable authority to provide res-
titution to consumers, but I will say that, you know, without the
FTC being able to seek that form of relief, you know, the states
sort of become the primary source of restitution and while we de-
vote considerable effort to consumer protection, the states can’t do
everything and, you know, in some cases, the FTC Act is broader
than a state’s consumer protection act and reaches farther, reaches
into professions that some states’ consumer protections acts don’t
cover.
You know, the presence of a lot of regulators pursuing restitution
allows every regulator to focus their efforts on different schemes,
you know, and broaden the range of conduct that can be inves-
tigated and prosecuted and, you know, the combined efforts of the
Federal Government, the FTC, and the states create a powerful de-
terrent effect, and when there’s one less regulator with the author-
ity to deprive wrong-doers of the fruits of their illegal conduct, that
deterrent effectiveness is necessarily weakened.
I know you asked about criminal prosecution. I’m a civil attorney
and I can’t really speak to that specifically. So I’m going to leave
that question maybe to my FTC colleagues.
Senator BLUMENTHAL. Let me ask you, Ms. Patten. You raised
the issue of independent litigating authority. How important could
that be to the FTC?
Ms. PATTEN. I think it’s vitally important to the FTC. When
harm is done and consumers need help, time is of the essence. The
FTC should not have to ask permission to go in and deal with
harmful conduct and they need to get that money to consumers as

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quickly as possible and without independent authority that cannot
happen.
Senator BLUMENTHAL. You know, your organization is in the
business of educating and it does extraordinary work in raising
warnings to consumers and making sure they know about these
scams. Why is education not enough?
Ms. PATTEN. Education is not enough because our 320 million
consumers in the United States are continually scammed and they
need to be made whole and education doesn’t do that. So without
13B and without a functioning FTC, that’s not going to happen.
Senator BLUMENTHAL. And part of education is to lead con-
sumers to report wrongs against them——
Ms. PATTEN. Yes.
Senator BLUMENTHAL.—which enables the FTC and state law en-
forcers to take action to stop the scammers, correct?
Ms. PATTEN. That’s correct. The Consumer Sentinel Network
that the FTC relies on all the time is based on consumer com-
plaints.
Senator BLUMENTHAL. You know, one may wonder, given all
that’s been said about 13B authority, who’s against restoring it and
why.
Ms. PATTEN. Criminals.
Senator BLUMENTHAL. Criminals, scammers, the payday lenders
who exploit working families, the for-profit colleges that prey on
veterans, the fake vaccine card perpetrators or the other kinds of
con artists that prey on seniors, and, without trying to disparage
anyone unfairly, the Chamber of Commerce has said in a letter to
the Committee, in fact just before last week’s FTC oversight hear-
ing, that it opposes any action on 13B.
I recognize that Acting Chair Slaughter and Commissioner Phil-
lips disagreed with the Chamber of Commerce in their testimony,
but, regrettably, they were provided with that letter just minutes
before their testimony.
I would be interested to know, Mr. Kaufman, whether you have
a further rebuttal to the Chamber of Commerce.
Mr. KAUFMAN. Absolutely. I could spend, unfortunately, far too
long with my rebuttal to that letter. I strongly disagree with their
propositions.
At the outset, they’re fundamentally saying that we should not
be able to get money from companies unless they engage in egre-
gious fraud. So unless we meet that standard of egregious fraud,
we shouldn’t be able to get money back from consumers, and I
think that is just bad policy.
The issue when consumers are deceived is not what was the in-
tent of betrayal? What was the mental state of the company that
engaged in the bad conduct? Who should bear that burden? The
company that deceived consumers or consumers who relied upon
that company and made a deceptive purchase. It is consumers who
should get their money back, irrespective of the mental state of the
advertisers.
So I could not disagree more with so many of the propositions in
the Chamber’s letter.

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Senator BLUMENTHAL. And one might ask what is non-egregious
fraud? Garden variety exploitation of seniors or veterans or COVID
sufferers?
Mr. KAUFMAN. Absolutely. In the advertising area, that is an
area where we think it would be particularly challenging. If there
is a bad study that a company’s relying on, can you say that it was
fraudulent for them to rely upon that study? It creates very chal-
lenging litigation issues.
I’ve litigated health claims for about 7 years at the FTC. I’ve
seen firsthand how challenging it is to bring these cases but then
to increase the burden and require some showing of intent on be-
half of the company would be unacceptable.
Senator BLUMENTHAL. In effect, what the Chamber of Commerce
wants to do is convert 13B into a criminal statute.
Mr. KAUFMAN. I haven’t thought about it from that perspective,
but I agree with your commentary.
Senator BLUMENTHAL. Requiring mens rea or criminal intent for
there to be a violation which is unheard of in prior consumer pro-
tection jurisprudence. If that were the case, state attorneys general
would be straitjacketed in everything they did and the FTC would
be severely undermined.
Let me turn to Senator Luján. I’m told he is available. Senator
Luján?
STATEMENT OF HON. BEN RAY LUJÁN,
U.S. SENATOR FROM NEW MEXICO
Senator LUJÁN. Thank you so much, Chairman. I very much ap-
preciate your leadership and this important hearing that we’re hav-
ing today.
I also want to recognize Ranking Member Blackburn for calling
this hearing to explore actions we can take to stop COVID–19-re-
lated scams.
It’s critical to understand how we best protect our communities
in times of crisis and I look forward to working together on this
topic.
Even as the FTC tackles this unprecedented crisis of fraud and
abuse against all Americans, we still don’t understand the full
scale of this crisis. That’s why as a House member, I introduced the
bipartisan Protecting Indian Tribes from Scams Act to better un-
derstand the scope of scams targeting tribes and tribal members
and to create a roadmap for Congress to put an end to these
schemes. The House passed this bill last year but we still have
more work to do.
Mr. Kaufman, can I get a commitment from you to work with me
on this issue?
Mr. KAUFMAN. Absolutely. We’d be very happy to do so.
Senator LUJÁN. And last year, I introduced the Stopping COVID
Scams Act so the FTC could go after scammers quickly and deci-
sively. I’m glad the parts of that bill were incorporated into Con-
solidated Appropriations Act in December.
Critically, the FTC now has civil penalty authority and I was
glad to see that the Commission brought its first action seeking
monetary penalties under its new authority and targeting deceptive
COVID–19 marketing of Vitamin D and zinc products.

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We can’t just give scammers a slap on the wrist, especially when
people’s lives and livelihoods are on the line.
Mr. Kaufman, should Congress expand the FTC’s present Civil
Penalty Authority to make it permanent and increase its scope be-
yond the COVID–19 health crisis?
Mr. KAUFMAN. So I do think there are areas where the FTC
could definitely use Civil Penalty Authority. Data security and pri-
vacy first-time violations are an area where I do think Civil Pen-
alty Authority is appropriate. I’d be glad to discuss with your office
other areas where it might be suitable for the FTC to have Civil
Penalty Authority against first-time violators.
Senator LUJÁN. Appreciate that. Mr. Kaufman, as we recently ex-
plored in the hearing in the Communications Subcommittee, mis-
leading and contradictory information about the coronavirus on so-
cial media platforms and broadcast media has done real harm.
Fake claims have gotten in the way of public health professionals
trying to do their job and protect our communities.
That is why last week Senator Klobuchar and I requested infor-
mation from Jack Dorsey and Mark Zuckerberg about why they
have failed to take action against a small group of 12 accounts re-
sponsible for up to 65 percent of anti-vaccine content on their plat-
forms.
Many of these accounts turned their lies into profit by selling
supplements, books, and other miracle cures. This needs to stop.
So my question actually is to Ms. Patten. Do you have any rec-
ommendations on steps Congress can take to ensure online plat-
forms address misinformation super spreaders?
Ms. PATTEN. Well, I think the very first thing Congress needs to
do is fix 13B. After that, I think that broad civil penalty authority
to the FTC would go a long way in deterring these platforms and
social media companies to do the right thing, and I think that a
civil penalty fund that could reimburse victims of these frauds that
you’re talking about would also be appropriate.
Senator LUJÁN. Mr. Kaufman, do you have a response to that?
Mr. KAUFMAN. Yes. I definitely agree strongly on the civil pen-
alty fund. It’s a tool that other agencies have where civil penalties
can go to the agency to disburse money to consumers that were
harmed. So I think that would be—and again I’m speaking for my-
self and not for the Commission. But I do know the Acting Chair
is very interested in that, as well, but a civil penalty fund would
be a highly effective tool for the agency and for consumers.
Senator LUJÁN. And in New Mexico, we started seeing COVID–
19 scams as early as last March. They tried to scare seniors that
they would lose their social security payments and it wasn’t true.
They tried to sell miracle cures. They were lies. Especially in rural
communities, many of these scammers reached their targets not
over the Internet but on the telephone. Robocalls aren’t just a nui-
sance, they are used to take advantage of elderly and vulnerable
populations when they’re most at risk.
I’m encouraged that the FTC is taking action against companies
that enable those calls, including voice over Internet protocol pro-
viders. However, it looks like the number of illegal calls are on the
rise once again.

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Mr. Kaufman, what additional tools does the FTC need to fight
illegal robocalls?
Mr. KAUFMAN. A lot of the challenges in fighting robocalls are
technological and we are coordinating closely with the FCC and we
do have a lot of cases in the pipeline on robocall issues, but on the
other issues you raised, I think education is a very important part
of the FTC’s mission and it’s important that we not just put infor-
mation on our website but that we’re reaching out to consumers,
to different communities, to share the information about hang up
the phone when you get a robocall.
So one thing we’ve done is we’ve mailed postcards to hundreds
of thousands of consumers who are in neighborhoods which have
low Internet access. So we’ve appeared on a lot of radio shows in
order to get the message out to consumers that might not go to our
website to find the information.
Senator LUJÁN. Thank you, Mr. Chairman. I yield back.
Senator BLUMENTHAL. Thanks a lot, Senator Luján.
A couple of final questions. I appreciated the Acting Chair’s an-
nouncement about the Consumer Community Advocate Center. I
hope you’re familiar with it. We all recognize that fraud actually
exploits the most vulnerable in hard-to-reach communities.
I’m hoping that the FTC can partner with leaders in local com-
munities, faith leaders, senior citizens leaders and advocates.
What is the plan for getting the center started, the Community
Advocate Center?
Mr. KAUFMAN. So the Community Advocate Center, we an-
nounced it about a month ago, it’s a way for legal service organiza-
tions to file complaints with the FTC on behalf of their clients and
get advice back about what their clients should do.
We kicked it off a month ago. We’ve already signed up 30 dif-
ferent organizations and we have support from a lot of national or-
ganizations, as well. So it is just starting up and we think it has
a lot of promise to get us information about frauds that are tar-
geting low-income communities who may be less likely to report to
the FTC or to other law enforcement agencies.
Senator BLUMENTHAL. Thank you. And finally the Funeral Rule,
the Commission requested last summer comments on changes to
the Funeral Rule.
Does the Commission intend to make changes to that rule?
Mr. KAUFMAN. I can say the rule review is still underway and
we are looking closely at the comments and more will be coming
in the future.
Senator BLUMENTHAL. Thank you.
I want to just close by thanking all of the witnesses for this ex-
cellent testimony. It’s been a great start to our subcommittee’s se-
ries of hearings. I hope we will explore more of the COVID scams
that we’re seeing multiplying and exploding literally every day. I
think education, Ms. Patten, is a very important component here.
As you’ve described so eloquently, there are enforcement actions
that need to be taken as a deterrent, as a source of restitution, and
as a punishment, and I’m hoping that the FTC will play an in-
creasingly vigorous role with additional resources that are abso-
lutely necessary and as to the tech platforms, we need to make

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them accountable for enabling these kinds of scams, and thoughtful
revision to Section 230 is key to that effort.
Thank you to Ms. Alexander, Mr. Rhodes, Professor Kovacic, and
to Mr. Kaufman, and Ms. Patten. Really appreciate your being
here, and thanks to my colleagues, especially Senator Blackburn.
The hearing record will remain open for two weeks. Any Senators
who’d like to submit questions for the record should do so by May
4. We ask that your responses be returned to the Committee as
quickly as possible and in no case later than two weeks after you
receive these questions.
1That concludes today’s hearing. Thank you all.
[Whereupon, at 11:39 a.m., the hearing was concluded.]

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A P P E N D I X

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. RICHARD BLUMENTHAL TO
DANIEL KAUFMAN
Prevalence and availability of fraudulent cures and treatments. The Federal Trade
Commission (FTC) has sent nearly 400 warning letters to companies and individuals
who claim their products treat or prevent COVID–19, forcing many of these scam
artists to take down their false claims. The FTC has done a commendable job in
this massive undertaking despite limited resources.
Unfortunately, several COVID–19 profiteers—including including some of the big-
gest sellers of fake COVID–19 ‘‘treatments’’ and ‘‘cures’’—continue to spread their
false health claims and rake-in millions of dollars selling their products. For exam-
ple, Joseph Mercola continues to peddle false claims on social media and in his new
book (which is now a best seller on Amazon.com) that vitamin C, D, Zinc and Sele-
nium can treat and prevent COVID–19, and he sells these same products on Ama-
zon.com under the ‘‘Amazon Choice’’ label. He continues to do so despite a warning
letter from the Food and Drug Administration (FDA). Some of his dangerous
COVID–19 treatment claims are even hosted on the National Institutes of Health’s
(NIH) National Library of Medicine.
Question 1. What specific, additional resources and authorities does the FTC need
to enhance its enforcement efforts to protect the public during this pandemic?
Answer. The most critical issue affecting the FTC’s ability to fulfill our enforce-
ment mission is the recent loss of a pillar of our statutory authority. On April 22,
2021, the U.S. Supreme Court held that the FTC cannot seek equitable monetary
relief under Section 13(b) of the Federal Trade Commission Act,1 reversing four dec-
ades of case law that the Commission has used to provide billions of dollars of re-
funds to harmed consumers. Accordingly, the Commission has requested that Con-
gress amend Section 13(b) to provide the FTC with the ability to seek monetary re-
lief under that authority.2 I join that request.
While it is critical that the FTC step up its enforcement against pandemic-related
scams, so too must major tech platforms. Unfortunately, many of the largest plat-
forms use Section 230 of the Communications Decency Act as a shield against tak-
ing responsibility for fraud happening on their platform, an advantage brick-and-
mortar retailers do not enjoy. I am grateful that Congress is looking at Section 230
reform and happy to provide assistance.
Question 2. How does your agency coordinate with other Federal agencies, such
as the FDA and NIH, to track dangerous COVID–19 health claims and issue warn-
ing letters to fraudsters?
Answer. FTC staff communicate and coordinate regularly with our state and Fed-
eral law enforcement partners to enhance our efforts to protect consumers against
COVID–19 scams.
With regard to our Federal partners, the FTC—along with representatives of
other agencies including CFPB, CBP, EPA, FBI, FDA, ICE, and USPIS—partici-
pates in a Department of Justice-led inter-agency working group to share intel-
ligence about emerging COVID–19 scams and to de-conflict targets. Separately, FTC
staff consult with FDA staff on a near-daily basis to share investigative information
and coordinate work with regard to warning letters sent jointly by the two agencies
to entities peddling products or services claimed to prevent, treat, or cure
coronavirus disease. Agency staff also work closely with Federal partners on con-
sumer and business education outreach through a variety of methods and projects,
such as joint webinars on false COVID–19 advertising claims, posting of FTC

1 See AMG Cap. Mgmt.,LLC v. Fed. Trade Comm’n, 141 S.Ct. 1341 (2021).
2 See Press Release, FTC Testifies Before Congress on its Work to Protect Consumers from
COVID–19 Scams and Threats to its Ability to Return Money to Victims of Illegal Conduct, Apr.
20, 2021, www.ftc.gov/news-events/press-releases/2021/04/ftc-testifies-congress-its-work-protect-
consumers-covid-19-scams.
(67)

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COVID–19 resources on the HHS’s website for older adults, and drafting of relevant
FAQs for the COVID–19 resources page on usa.gov.
FTC staff has also communicated with staff in offices of state Attorneys General
to discuss consumer fraud related to the COVID–19 pandemic, during calls coordi-
nated by the National Association of Attorneys General. During these calls, which
also involved enforcers from other Federal agencies, we have exchanged information
about scams encountered, provided updates on formal law enforcement actions, and
informed state enforcers when the FTC has issued new or updated consumer edu-
cation guidance materials that they can share with their constituents. FTC staff
also closely coordinates COVID–19 outreach efforts and anti-fraud messaging with
NAAG, including radio media tours, blog posts, infographics, and social media cam-
paigns.
The FTC commonly refers investigative leads to other Federal or state enforcers
as circumstances warrant, for instance, to another Federal agency with direct regu-
latory responsibilities over the product in question, or to a state Attorney General’s
office if the product in question appears to be advertised or available to a limited
geographic market. We also regularly receive and investigate referrals from other
law enforcement agencies.
We will continue to coordinate and cooperate with our state and Federal enforcer
partners to maximize the impact of our efforts to combat fraud related to the
COVID–19 pandemic. To date we have issued more than 400 warning letters in this
area, including nearly 130 issued jointly with FDA.
Threats to Section 13(b) authority. Until the Supreme Court’s ruling on April 22,
the single strongest tool in the Commission’s tool box was Section 13(b) of the FTC
Act, which as Chairwoman Slaughter explained, ‘‘allows the agency to return money
to wronged consumers and put law-breakers on the hook for the costs of their illegal
conduct.’’ It will be nearly impossible now to return money to consumers now.
Question. Let’s say a consumer was scammed today and loses their whole liveli-
hood. If that scammer fights you at every step under Section 19, what is that proc-
ess and how long from now will consumers get their money back? And how much
would it cost for the FTC to pursue that case?
Answer. Because the Supreme Court ruled in AMG that courts can no longer
award the Commission monetary relief under Section 13(b) of the Act, the Commis-
sion’s ability to provide redress to consumers who lose money to scammers is signifi-
cantly impaired. Post AMG, the Commission can now only obtain redress for
scammed consumers through Section 19 of the Act. If the scam did not involve viola-
tion of a Commission rule, the Section 19 process is time consuming and resource
intensive.
For scams that do not involve rule violations, the process to obtain monetary relief
would be as follows if the defendant fights every step of the way:
1. The Commission authorizes staff (‘‘complaint counsel’’) to initiate an adminis-
trative action under Section 5(b) of the Act. 3
2. If complaint counsel prevails at the administrative hearing, the defendant ap-
peals to the Commission.
3. If complaint counsel prevails on the appeal before the full Commission, the
order becomes a final Commission cease and desist order. The defendant then
appeals the ruling to a U.S. Circuit Court of Appeals of the defendant’s choos-
ing.
4. If the Commission prevails in the Circuit Court of Appeals, the defendant pe-
titions for Supreme Court review.
5. If the Supreme Court hears the case and rules in favor of the Commission
or denies review, the first phase of the process is complete, resulting in a final
administrative cease and desist order against the defendant.
6. Once the final administrative order is obtained, the Commission then com-
mences the second phase by filing an action for monetary relief in U.S. Dis-
trict Court under Section 19(a)(2) of the FTC Act. To obtain monetary relief,
the Commission must prove that the defendant engaged in unlawful conduct
that a reasonable person would have known to be ‘‘dishonest or fraudulent.’’ 4
7. If the Commission prevails in district court, the defendant appeals the mone-
tary relief judgment to the U.S. Circuit Court of Appeals.
8. If the Commission prevails in the Circuit Court of Appeals, the defendant pe-
titions the Supreme Court review.

3 15 U.S.C. § 45(b).
4 Id. § 57b (a)(2).

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9. If the Supreme Court hears the case and rules in favor of the Commission
or denies review, the second phase of the process is complete, resulting in a
final judgment against the defendant for monetary relief.
10. The Commission collects on the judgment.
11. The Commission distributes refund checks to consumers who lost money to
the scam.
In essence, the process for obtaining monetary relief under Section 19(a)(2) is a
bifurcated one, with liability adjudicated in the Section 5(b) administrative pro-
ceeding and monetary relief determined in the Section 19(a)(2) district court pro-
ceeding. Because the Commission must litigate two consecutive proceedings to ob-
tain monetary relief via Section 19(a)(2), the process involves far more time and re-
sources than the pre-AMG process of obtaining monetary and injunctive relief in a
single proceeding brought under Section 13(b).
Unsurprisingly, this process takes a long time. The Commission’s past experience
using this pathway indicates that consumers can expect that it will take about a
decade from the filing of an administrative complaint for the Commission to provide
refunds to harmed consumers. For example, in the Commission’s action against
Figgie International, Figgie fought at every step of the way. The Commission filed
its administrative complaint in May 1983. After twelve years of litigation, the Com-
mission finally was able to distribute refunds to consumers in June 1995.5 Even in
cases where defendants have not fought at every step, it took more than seven years
for the Commission to provide refunds to consumers using the Section 19(a)(2) path-
way.6
Moreover, the inefficiencies of Section 19(a)(2) are exacerbated in cases in which
preliminary injunctive relief is necessary. In cases involving hardcore frauds and
scams, the Commission typically seeks an ex parte temporary restraining order that
imposes an asset freeze, puts corporate defendants under the control of a court-ap-
pointed receiver, and grants the Commission access to business premises to secure
documents and evidence. Such extraordinary preliminary relief is necessary because
defendants in hardcore fraud cases often dissipate assets or destroy evidence when
they learn that the FTC has brought an enforcement action against them. Prior to
AMG, the Commission sought such ex parte relief concurrently with its action for
monetary and permanent injunctive relief under Section 13(b). Post AMG, however,
courts may still be able to award ex parte preliminary relief under the preliminary
injunction provision of Section 13(b), but such relief will be to maintain the status
quo pending resolution of the Commission’s administrative complaint and to pre-
serve the district court’s ability to award monetary relief in a subsequent Section
19 action for monetary relief. Thus, in cases in which preliminary relief is war-
ranted, the bifurcated process in a typical Section 19(a)(2) case will be trifurcated:
(1) the Commission will first institute a proceeding for preliminary relief in Federal
district court under Section 13(b) in which the Commission will have to establish,
and the district court will have to assess, the Commission’s likelihood of success on
the merits as a predicate to granting preliminary relief; (2) the Commission will
next file and litigate the merits of its complaint in an administrative proceeding;
and (3) the Commission will then return to Federal district court after completion
of its administrative litigation to seek monetary relief under Section 19(a)(2). This
trifurcated process will be highly inefficient—the Commission and defendants will

5 See FTC v. Figgie Int’l, Inc., 994 F.2d 595 (9th Cir. 1993), cert. denied, 114 S. Ct. 1051
(1994); In re Figgie Int’l, Inc. 107 F.T.C. 313 (1986) (complaint filed May 17, 1983), aff’d sub
nom Figgie Int’l v. FTC, 817 F.2d 102 (4th Cir. 1987); Press Release, Federal Trade Commission,
Figgie International, Inc. (June 9, 1995), https://www.ftc.gov/news-events/press-releases/1995/
06/figgie-international-inc.
6 In the Commission’s action against Telebrands Corporation for making false and deceptive
weight loss claims, seven years elapsed between the start of administrative proceedings and the
Commission’s distribution of $7 million in refunds to harmed consumers. In re Telebrands Corp.,
Docket No. 9313, 2003 WL 22319292 (F.T.C. Sept. 30, 2003), aff’d sub nom Telebrands Corp.
v. FTC, 457 F.3d 354 (4th Cir. 2006); Press Release, Federal Trade Commission, FTC to Send
Refund Checks to Consumers Who Bought Bogus ‘‘Ab Force’’ Weight Loss Devices (Nov. 18, 2010),
https://www.ftc.gov/news-events/press-releases/2010/11/ftc-send-refund-checks-consumers-who-
bought-bogus-ab-force-weight. The process was ‘‘faster’’ because Telebrands agreed to a $7 mil-
lion settlement during the pendency of the Section 19(a)(2) district court proceeding. Press Re-
lease, Federal Trade Commission, Marketers of Ab Force Weight Loss Device Agree to Pay $7
Million for Consumer Redress (Jan. 14, 2009), https://www.ftc.gov/news-events/press-releases/
2009/01/marketers-ab-force-weight-loss-device-agree-pay-7-million. It took ten years for the
Commission to obtain monetary relief against Koskot Interplanetary, an unlawful multi-level
marketing scheme. See FTC v. Turner, No. 79–474-Orl-Civ-R, 1982 WL 1947 (Dec. 29, 1982);
In re Koscot Interplanetary, 86 F.T.C. 1106 (1975) (complaint filed May 24, 1972), aff’d sub nom
Turner v. FTC, 580 F.2d 701 (D.C. Cir. 1978).

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be mired in years of litigation, consumers will have to endure even longer waits to
get refunds, and a district court judge will spend years overseeing an asset freeze,
receivership, and preliminary injunction for a case in which the merits will be liti-
gated in a separate administrative forum. Given that the court would be asked to
order an asset freeze and monitor it for several years while the matter proceeds
through other fora, and given the risk the case may not make it back to the court
issuing the asset freeze, many courts might not issue such an order in the first
place.
It is difficult to assess how much additional money the Commission will have to
spend pursuing monetary relief under the Section 19(a)(2) pathway. Nonetheless,
because the process is far more consuming than Section 13(b) pathway the Commis-
sion used prior to AMG, litigating cases under the Section 19(a)(2) pathway will tax
the Commission’s resources. Commission staff on those cases will mired in years of
litigation, which will prevent those same staffers from being able to bring new en-
forcement cases. As a result, the opportunity cost is significant. The inefficient proc-
ess set forth in Section 19(a)(2) will result in the Commission bringing fewer en-
forcement actions than it did prior to AMG.
In Section 19 cases that do involve the violation of a Commission rule governing
unfair or deceptive conduct,7 the Commission can still proceed directly to Federal
court, but even those actions will not yield the same results that the Commission
has historically obtained under Section 13(b) due to Section 19’s three-year statute
of limitations. Unlike Section 13(b), which has no statutory time bar, Section 19’s
three-year limitations period will limit the number of consumers who are eligible
for redress through a Section 19 action. Many Commission actions involve schemes
that have been operating for many years, primarily because it takes several years
for such schemes to generate a sufficient volume of complaints to justify the Com-
mission’s use of its limited resources to commence an investigation. As a result, by
the time the Commission commences and completes its investigation and files suit,
multiple years may have elapsed from the time the unlawful conduct first began.
In such cases, consumers who were victimized more recently will receive redress,
whereas consumers who had the misfortune of being victimized in the early days
of the scheme will be left out in the cold due to Section 19’s three-year limitations
period.
Counterfeit good commercial activity. Online retail platforms have dealt with a
barrage of fraudulent goods—such as personal protective equipment, vaccines, vac-
cine cards, and others—throughout the COVID–19 pandemic. While the FDA, Cen-
ters for Disease Control, and other agencies shared information to help consumers
identify and avoid fake products, online retail marketplaces are also responsible for
detecting and removing such content from their sites.
Question 1. What role have online retailers played in identifying and ending coun-
terfeit good commercial activity?
Answer. FTC staff regularly engages with social media and sales platforms re-
garding products and advertising claims of concern. We currently send copies of our
health claims warning letters to platforms where deceptive claims are disseminated
or the products in question are sold. In other instances, we have proactively reached
out to marketplace platforms regarding particular products or product categories of
concern. Although we have found the platforms can be responsive to these concerns,
online retail platforms must do much more to combat problematic claims and con-
duct in their marketplace, including the harmful sale of counterfeit and other fake
goods. Over the last year, the Commission has seen a surge in complaints about
scams and frauds proliferating online, particularly on ecommerce platforms. As dis-
cussed above, ending the scourge of fraudulent claims may require Congress revis-
iting Section 230 of the Communications Decency Act.
In terms of the specific issue of counterfeit and pirated goods, other agencies, in-
cluding the Department of Commerce, Department of Homeland Security, and U.S.
Trade Representative, have studied the problem closely and have additional exper-
tise and knowledge to answer this question.
Question 2. What recommendations do you have for Congress regarding ways to
address counterfeit good commercial activity on online platforms and marketplaces?
Answer. As the FTC’s complaint data shows, fraud in the online marketplace has
skyrocketed over the last year. Legal requirements to verify the identities of third-
party sellers, and to verify the authenticity of sellers’ goods before they are sold or

7 For example, the recently enacted COVID–19 Consumer Protection Act treats deceptive acts
or practices associated with the treatment, cure, prevention, mitigation, or diagnosis of COVID–
19 as rule violations that the Commission can directly enforce in Federal court under Section
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shipped by the online retailer, may help address the problem of counterfeits and
other scams. But ultimately, rooting out fraud may require revisiting the special
legal immunities platforms claim under Section 230 of the Communications Decency
Act, an advantage that brick-and-mortar businesses do not enjoy. In addition, as
noted in response to Question 1, above, other agencies have studied this issue and
have provided specific recommendations to address counterfeit and pirated goods on-
line. See, e.g., Khttps://www.dhs.gov/publication/combating-trafficking-counterfeit-
and-pirated-goods; https://ustr.gov/about-us/policy-offices/press-office/press-re-
leases/2021/january/ustr-releases-2020-review-notorious-markets-counterfeiting-
and-piracy. FTC staff has provided technical assistance on bills intended to imple-
ment some of these recommendations.
Question 3. When the FTC secures civil penalties under the COVID–19 Consumer
Protection Act, will the Commission provide financial relief to consumers, such as
refunds for scams and deceptive products?
Answer. The CCPA provides both for compensatory relief through Section 19 of
the FTC Act, and civil penalties through Section 5(m) of the Act. The Commission
always strives to return compensatory funds to consumers, and those obtained
through the CCPA will be no different. In addition, the CCPA allows the Commis-
sion to seek civil penalties, which can help deter fraud in the first instances. In
many cases, the Commission intends to seek both compensatory funds and civil pen-
alties.
Criminal referrals on fraud and scams. Mr. Kovacic mentions in his prepared re-
marks that the ‘‘only way to deter the most serious fraudulent schemes we have ob-
served is to subject violators to criminal punishment.’’ We need to use the prospect
of time in jail to deal with some of these worst offenders of our consumer protection
law.
Question 1. How many criminal referrals has the FTC sent to the Department of
Justice (DOJ) and state law enforcement regarding pandemic fraud?
Answer. The FTC launched the Criminal Liaison Unit (‘‘CLU’’) in 2003. From
2003 through May 2020, prosecutors have relied on FTC information and support
to charge 1,050 defendants. During the coronavirus pandemic, the Commission has
referred six matters involving pandemic fraud to our criminal partners. Over the
coming years, we intend to step up the referral volume significantly.
Question 2. What are the nature of these violations, is it small scams, or is the
FTC willing to refer large companies and prominent figures to the DOJ?
Answer. The FTC refers cases to criminal authorities that require the deterrence
provided by prosecution, and that our prosecutorial partners will take. For criminal
prosecution, prosecutors will usually need to prove fraud (e.g., mail or wire fraud)
and are always interested in intent. The better the facts show the violative conduct
was intentional, the more likely the case will be taken. Assuming the requisite facts
are present, the size of the company only makes the case more attractive to criminal
prosecutors.
Question 3. Mr. Kovacic shared some ideas for making referrals more effective and
frequent. What do we need to do to expand the FTC’s Criminal Liaison Unit, to
make sure the FTC keeps making these referrals?
Answer. As the numbers bear out, the Commission’s criminal referral process is
extremely strong, and has continued to get stronger over the years. The FTC is able
to refer all appropriate cases and, unlike when the CLU program first began, we
now have prosecutors fighting over our largest cases.
Question 4. From your experience at the FTC, what are the hurdles the Commis-
sion encounters in referring crimes and seeing cases filed against the worst offend-
ers?
Answer. The Commission’s Criminal Liaison Unit has been a resounding success.
Initially, it was difficult to get criminal prosecutors to take our cases, presumably
because prosecutors were unfamiliar with the agency and reluctant to take cases in
which sentencing had historically been light (i.e., most sentences for consumer fraud
were measured in months, not years). Through years of hard work, both predicates
have changed. We are now well known among the criminal prosecution community,
having established close relationships across the country; and sentences in our larg-
est cases are now measured in decades, not months. We still have trouble success-
fully referring smaller cases that cause significant harm to a smaller number of peo-
ple—but we are now working more closely with state and local prosecutors to ad-
dress these cases.
Chamber of Commerce response to 13(b). A few minutes before the Commerce
Committee’s April 20, 2021, hearing, Strengthening the Federal Trade Commission’s

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Authority to Protect Consumers, the Chamber of Commerce sent a letter to the
Committee criticizing the FTC’s use of 13(b).
Question. Now that you have had a chance to read the letter, is there anything
else you want to address about the Chamber of Commerce’s criticism of the FTC
and its stance on Section 13(b)?
Answer. As then Acting Chairwoman Slaughter noted in her letter last month to
the Senate Committee on Commerce, Science, and Transportation,8 the Chamber’s
position, which is based on numerous misstatements and faulty premises, would
harm consumers and honest competitors. I join the Commission in urging Congress
to restore the FTC’s ability to use Section 13(b) of the FTC Act to return money
to consumers and clarify that the FTC can use Section 13(b) to enjoin past conduct
that is reasonably likely to recur.

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. RICHARD BLUMENTHAL TO
WILLIAM E. KOVACIC
Criminal referrals on fraud and scams. Mr. Kovacic mentions in his prepared re-
marks that the ‘‘only way to deter the most serious fraudulent schemes we have ob-
served is to subject violators to criminal punishment.’’ We need to use the prospect
of time in jail to deal with some of these worst offenders of our consumer protection
law.
Question 1. How many criminal referrals has the FTC sent to the Department of
Justice (DOJ) and state law enforcement regarding pandemic fraud?
Answer. I do not know how many referrals the FTC has made. I expect that the
Bureau of Consumer Protection can provide the number of referrals by year going
back to the creation of the Criminal Liaison Unit.
Question 2. What are the nature of these violations, is it small scams, or is the
FTC willing to refer large companies and prominent figures to the DOJ?
Answer. I do not know what types of matters the FTC has referred to DOJ for
possible criminal prosecution in the time since I left the Commission in 2011. I ex-
pect that the Bureau of Consumer Protection has compiled a data set that lists all
referrals and identifies the alleged wrongdoers and the severity of the alleged of-
fense.
Question 3. Mr. Kovacic shared some ideas for making referrals more effective and
frequent. What do we need to do to expand the FTC’s Criminal Liaison Unit, to
make sure the FTC keeps making these referrals?
Answer. The primary limitation upon the effectiveness of the FTC’s Criminal Liai-
son Unit CLU) mechanism is funding. A properly resourced CLU would have a min-
imum of five fulltime professionals supported by two administrative staff. This level
of staffing would enable the CLU to work with the Bureau of Consumer Protection
to identify matters for referral to the DOJ, to build effective working relationships
with DOJ, to assist DOJ in the evaluation and preparation of cases, to maintain
complete data sets regarding the history and results of referrals, to establish closer
relationships with Federal prosecutors outside DOJ (e,g,. the postal system inspec-
tors), and to form partnerships with criminal prosecutors at the state level.
Question 4. From your experience at the FTC, what are the hurdles the Commis-
sion encounters in referring crimes and seeing cases filed against the worst offend-
ers?
Answer. I see two important obstacles. The first is the limitation on funding dis-
cussed immediately above. The second is the challenge of persuading the DOJ and
other criminal prosecution offices to assign a higher priority to serious consumer
fraud amid numerous other demands upon their resources. The criminal enforce-
ment offices at the federal, state, and local levels are pressed to address a multitude
of grave offenses, and the FTC’s referrals are competing for attention with numer-
ous other forms of serious misconduct.
One potential solution to the second obstacle would be for the President to under-
take a ‘‘whole of government’’ approach, similar to President Biden’s initiative on
competition, for consumer fraud. Such an initiative would seek to create a forum
to raise awareness across public agencies about the seriousness of consumer fraud
and to engage agencies beyond the FTC to use their powers to detect and prosecute

8 Letter from Acting Chairwoman Slaughter to the Senate Committee on Commerce, Science,
and Transportation Regarding Section 13(b) of the Federal Trade Commission Act, https://
www.ftc.gov/public-statements/2021/05/letter-acting-chairwoman-slaughter-senate-committee-
commerce-science

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consumer fraud. The FTC would play a central role in the work of this whole of gov-
ernment initiative.
Chamber of Commerce response to 13(b). A few minutes before the Commerce
Committee’s April 20, 2021, hearing, Strengthening the Federal Trade Commission’s
Authority to Protect Consumers, the Chamber of Commerce sent a letter to the
Committee criticizing the FTC’s use of 13(b).
Question. Now that you have had a chance to read the letter, is there anything
else you want to address about the Chamber of Commerce’s criticism of the FTC
and its use of 13(b)?
Answer. The Chamber of Commerce (the Chamber) letter fails to recognize the im-
portance of restitution and disgorgement to the effective implementation of the
FTC’s anti-fraud program. Cease and desist orders are valuable—indeed, nec-
essary—remedies, yet forward looking injunctions by themselves have feeble deter-
rent value.
The Chamber’s letter does not persuade me that the Commission has sought equi-
table monetary remedies in inappropriate cases involving allegations of consumer
fraud. To my mind, the FTC has used a highly disciplined approach to ensure that
it seeks equitable monetary remedies in deserving cases.

RESPONSE TO WRITTEN QUESTION SUBMITTED BY HON. RICHARD BLUMENTHAL TO
KEVIN H. RHODES
Risks of enforcement limitations after 13(b). I commend 3M for spending the
money and time bringing counterfeiters and fraudsters to court. Fortunately, 3M
won disgorgement in these court cases, and donated the counterfeiter’s profits. Re-
grettably, now the FTC cannot do that.
Question. Why was disgorgement important in 3M’s efforts to stop and deter those
exploiting consumers and healthcare workers?
Answer. 3M has now filed 36 lawsuits in Federal courts across the United States
and in Canada against defendants engaged in fraud, counterfeiting and price
gouging in connection with purported 3M respiratory protection products. In those
actions, 3M’s primary goal is to secure injunctive relief and judgments that put a
stop to the defendants’ unlawful conduct. In addition, 3M has obtained
disgorgement of the defendants’ ill-gotten profits or other monetary recoveries
through court orders or agreements by the defendants in a number of cases, and
3M is donating all of those monetary recoveries to COVID–19 related relief char-
ities.
3M believes that making pandemic profiteers pay and eliminating the profitability
of their unlawful schemes are important to stopping and deterring counterfeiting
and other unlawful behavior. Injunctive relief alone may stop the unlawful activities
of a defendant, but if that bad actor is able to keep the ill-gotten profits from its
unlawful activities, by the time it is stopped, the scheme may have generated sig-
nificant profits. Unfortunately, an injunction alone may be viewed as just a cost of
doing business. Absent disgorgement of profits, would-be counterfeiters may be
tempted to seek to obtain and keep profits from selling counterfeit products for as
long as they can until they are caught and stopped.
Thus, 3M believes that disgorgement is important to deter bad actors by making
it clear to them that fraud, counterfeiting and price gouging do not pay.
Disgorgement is a key point of leverage in 3M’s enforcement efforts, as many of the
fraudulent entities do not otherwise have a valid business, so often the main recov-
erable assets are their ill-gotten gains.
Disgorgement of profits sends a powerful message to wrongdoers. 3M has widely
publicized its enforcement efforts, including the monetary recoveries 3M has re-
ceived and donated. Publicizing that disgorgement is a remedy 3M has sought and
obtained helps deter would-be fraudsters by making clear 3M’s resolve not only to
find and stop their unlawful behavior, but also to make sure they do not reap finan-
cial benefits from their pandemic profiteering and exploitation of healthcare workers
and others seeking authentic 3M respirators.

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. RICHARD BLUMENTHAL TO
CYNTHIA ALEXANDER
Counterfeit good commercial activity. Online retail platforms have dealt with a
barrage of fraudulent goods—such as personal protective equipment, vaccines, vac-
cine cards, and others—throughout the COVID–19 pandemic. While the FDA, Cen-
ters for Disease Control, and other agencies shared information to help consumers

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identify and avoid fake products, online retail marketplaces are also responsible for
detecting and removing such content from their sites.
Question 1. What role have online retailers played in identifying and ending coun-
terfeit good commercial activity?
Answer. In my role as an Assistant Attorney General in Washington, I typically
learn about counterfeit and fraudulent commercial activity when online retailers
have not prevented it, and thus can speak to their role in ending such activity only
in the context of enforcement efforts. For example, in 2019, the Washington Attor-
ney General found that dozens of schools supplies sold on Amazon’s online market-
place had illegal levels of lead and cadmium. To resolve the investigation without
a lawsuit, Amazon entered into an agreement to block the sale of children’s school
supplies and jewelry on the platform without lab reports and other proof that the
products are not toxic. While consumer protection enforcement agencies can play a
role in ensuring online retailers take responsibility for counterfeit and fraudulent
products sold on their platforms, the online retailers usually have (or can readily
obtain) the data to be in the best position to combat the sale of such goods on their
platforms.
Question 2. What recommendations do you have for Congress regarding ways to
address counterfeit good commercial activity on online platforms and marketplaces?
Answer. I do not have specific recommendations, but my personal opinion (and not
necessarily that of my office) is that because online retail platforms are best posi-
tioned to prevent the sale of counterfeit and fraudulent goods on their platforms
(and indeed typically profit from such sales), they should be accountable when prod-
ucts offered or sold on their platforms are counterfeit, fraudulent, banned, mis-
labeled or otherwise unsafe.
Question 3. When the FTC secures civil penalties under the COVID–19 Consumer
Protection Act, will the Commission provide financial relief to consumers, such as
refunds for scams and deceptive products?
Answer. I will have to defer to the FTC on the proper scope of its authority.

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