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December 11, 2020

[Note: Horvitz & Levy Appellate Fellow Sarah Hamill prepared this summary of deceptive marketing practices during the pandemic.]

COVID-19 has created physical, economic, and social vulnerabilities and constant uncertainty. The global pandemic has also opened the door for deceptive practices, including false promises of immediate delivery of protective equipment, selling products with fraudulent claims that they prevent, treat, or cure COVID-19, and providing misleading information regarding COVID-19 financial relief.[1]

As a result, federal agencies have issued numerous warning letters[2] and the Federal Trade Commission (FTC) has filed suit against companies for deceptive COVID-19-related marketing practices.

For example, the FTC sued online merchandisers for failing to deliver on promises that sanitizer, face masks, face shields, and other products would ship the same day they were ordered, and then delaying the shipping and refusing to provide refunds.[3] The lawsuits allege violations of the FTC’s Mail, Internet and Telephone Order Rule, which requires companies to “notify consumers of shipping delays in a timely manner and give consumers the chance to cancel orders and receive prompt payments.”[4] In one case, the complaint alleges that an order totaling more than $10,000 for protective gowns for essential workers had not arrived after six weeks.[5] 

The FTC has also filed suit challenging false claims that products prevent, cure, or mitigate COVID-19.[6] One case alleged that a California marketer deceptively advertised “a $23,000 treatment plan as a scientifically proven way to treat COVID-19” that could cure the viral symptoms of COVID-19 within two to four days.[7] The company also falsely claimed the Food & Drug Administration had reviewed and accepted its treatment plan.[8] 

In response to marketing of COVID-19 financial assistance schemes, the FTC has sent warning letters to companies whose marketing suggests the companies are affiliated with either the U.S. Small Business Administration or the programs created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.[9] The FTC warned one financial aid company that its claim to provide “everything” a student needs to apply for emergency grants under the CARES Act as well as cash advances with “no interest, no fees –ever” is misleading, when, in fact, the company does not provide all necessary information, requires the cash advance to be paid back within 61 days, regardless of whether the student obtained any assistance from his or her school, and charges a monthly fee.[10] 

The global pandemic will likely continue to bring with it litigation against companies for deceptive and misleading marketing schemes regarding COVID-19-related products and financial assistance. We will continue to monitor developments in this area and keep you posted. 

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[1] Fraudulent Coronavirus Disease 2019 (COVID-19) Products, U.S. Food & Drug Administration (2020), https://www.fda.gov/consumers/health-fraud-scams/fraudulent-coronavirus-disease-2019-covid-19-products.
[2] FTC Coronavirus Warning Letters to Companies, Federal Trade Commission, https://www.ftc.gov/coronavirus/enforcement/warning-letters; Fraudulent Coronavirus Disease 2019 (COVID-19) Products, supra note 1; see, e.g., Warning Letter, U.S. Food & Drug Administration 1, 4-5 (2020), https://www.ftc.gov/system/files/warning-letters/fda-covid-19-letter_pa_green_wellness_llc.pdf.
[3] FTC Acts Against Online Sellers That Falsely Promised Fast Delivery of Facemasks and Other Personal Protective Equipment, Federal Trade Commission (Aug. 5, 2020), https://www.ftc.gov/news-events/press-releases/2020/08/ftc-acts-against-online-sellers-falsely-promised-fast-delivery.
[4] Id.
[5] Id.
[6] FTC Sends Letters Warning 20 More Marketers to Stop Making Unsupported Claims That Their Products and Therapies Can Effectively Prevent or Treat COVID-19, Federal Trade Commission (Nov. 12, 2020), https://www.ftc.gov/news-events/press-releases/2020/11/ftc-sends-letters-warning-20-more-marketers-stop-making.
[7] FTC Sues California Marketer of $23,000 COVID-19 “Treatment” Plan, Federal Trade Commission (July 31, 2020), https://www.ftc.gov/news-events/press-releases/2020/07/ftc-sues-california-marketer-23000-covid-19-treatment-plan.
[8] Id. COVID-19 has also created a wave of lawsuits against hand sanitizer companies for misrepresenting effectiveness and falsely claiming that the sanitizers counteract COVID-19. See Emily Field, Product Liability Cases to Watch in 2020: Midyear Review, Law360 (July 17, 2020), https://www.law360.com/articles/1292399/product-liability-cases-to-watch-in-2020-midyear-review.
[9] FTC and SBA Warn Six Companies to Stop Potentially Misleading Marketing Aimed at Small Businesses Seeking Coronavirus Relief Loans, Federal Trade Commission (June 24, 2020), https://www.ftc.gov/news-events/press-releases/2020/06/ftc-sba-warn-six-companies-stop-potentially-misleading-marketing.
[10] FTC Warns Frank Financial Aid to Stop Potentially Misleading Marketing Directed to Students Seeking Coronavirus Financial Relief, Federal Trade Commission (Nov. 16, 2020), https://www.ftc.gov/news-events/press-releases/2020/11/ftc-warns-frank-financial-aid-stop-potentially-misleading.