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COVID-19 Scams on the increase

The pandemic has caused a flood of unfair, misleading and abusive business practices, hitting consumers hard and leaving the most vulnerable ones more disadvantaged. The main issue is price gouging for essential hygiene consumer products such as masks, hand sanitizer and basic household products. SA’s National Consumer Commission has told EFSA that it is being overwhelmed by price-gouging cases. Hefty fines are already being handed out. The Kenyan and Nigerian governments have imposed price caps. Misleading advertisements with false claims are also flourishing, ranging from products claiming to prevent COVID-19 infection to fake test kits. Financial fraud schemes soliciting false donations and using phishing techniques are also on the increase. As UNCTAD has pointed out, fraudsters and opportunists are emerging across the world, which has prompted a network of consumer protection authorities in the European Union to issue a statement calling on online platform operators to monitor and crackdown on scams and unfair practices in the COVID-19 context. Some African governments are imposing sanctions, running public service announcements to guide consumers and businesses as well as collaborating with relevant stakeholders to protect consumers, according to the African Consumer Protection Dialogue Network.

UNCTAD recommends that governments take 9 key actions to protect consumers during the COVID-19 crisis:

  1. Set up coordination mechanisms composed of relevant government authorities, including health, customs, consumer protection and competition authorities to ensure coherent responses.
  2. Set up special market monitoring initiatives on essential consumer goods, including those that help curb infection such as masks and hand sanitizers.
  3. Evaluate the viability of imposing price caps for certain products, such as masks and hand sanitizers.
  4. Undertake enforcement action against excessive price increases or hoarding of goods; misleading and false claims.
  5. Urge major online platforms to cooperate in identifying such practices.
  6. Attend to the needs of vulnerable and disadvantaged consumers, particularly to ensure their access to essential goods and services, such as water, energy and financial services.
  7. Consider the possibility of extending deadlines for payment of monthly utility bills and credit cards, in cooperation with financial institutions.
  8. Launch campaigns to inform consumers on scams and misleading and unfair business practices related to COVID-19; and on how to file complaints, showing the avenues for redress.
  9. Cooperate with other consumer protection agencies by exchanging information on coronavirus-related national policies and measures in the field of consumer protection.

According to a Kaspersky Lab report, there has been a sharp spike in malware attacks in SA in mid-March, with affected devices increasing in number from the 20 to 30,000 average to approximately 310,00O. This peak in local attacks coincides at a time when remote working has significantly increased due to government’s lockdown measures. The report notes the attack types used vary, but over one third were what is called ‘brute-forcing of passwords’ – repetitive attempts at various password combinations. This technique is common and often works well with weak or repetitively used passwords or poorly configured systems.

Meanwhile, INTERPOL has unmasked an international COVID-19  racket aimed at 3 European countries – Germany, Ireland and the Netherlands. The elaborate plan targeted health authorities looking for personal protection equipment (PPE) as the COVID-19 pandemic took off.  According to INTERPOL’s report, ‘Unmasked: International COVID-19 fraud exposed’, what started as a chain of referrals eventually led to compromised emails and an advance-payment fraud scheme. The majority of the EUR 880,000 payment by German buyers to a supposed Dutch supplier was moved from The Netherlands to the UK with the final destination being Nigeria.

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Alastair Tempest

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