Good afternoon. I welcome you all here today to a hearing entitled protecting americans from covid19 scams. The nation continues to fight the unprecedented Public Health crisis brought on by the covid19 pandemic. It is our absolute . It is clear that resources are necessary for extinction missile crisis. However, during this time of National Emergency and needed recovery, there are scam artists who seek to take advantage of consumers, especially the most vulnerable communities, like that of our nation seniors. Sentinelthe Consumer Network reports that consumers across the u. S. Reported over 136,000 Different Cases of covid related scams, totaling approximately 90 million in total losses from january 1 to july 20, 2020. More specifically, at home in kansas over this same period of time, consumers report over 500 related cases, totaling 800,000 in financial losses. Everyone should also bear in mind that these are only the reported cases. It is fair to assume there are a number of scams that have not been reported today. The variety of these complex and innovative scams remains difficult for any consumer to wrap their head around, much less defend themselves against, whether it be health products, illegal robo calls pitching low health insurance, imposters claiming to be from federal agencies collecting mandatory payments, raising awareness to these practices is critical to educating consumers in protecting themselves. As such, this subcommittee has a efforts ton in their not only identify and address these harms, but also what exactly they are doing to prevent these harms from occurring in the first place. If there is a role for congress to play, we will need them today and in the future. I look forward to hearing from the federal trade commission on how there authorities are ,ddressing covid related scams and how enactment of the extension act, which i introduced with senator blumenthal, is essential for court naming these efforts. I would be interested to hear about protecting our seniors. It makes our competitions on how to prevent future scams during emergencies, and to distribute such information to seniors and their caregivers. Finally, the subcommittee looks forward to hearing more about Current Issues to identify, prosecute criminal organizations engaged in these illegal activities. If there are ways congress can assist to strengthen the current framework, joined with local agencies in the private sector to address the crimes, the subcommittee would welcome the suggestions. The Witness Panel provides a variety of different perspectives on the same important issue. Joining the subcommittee is the attorney general of the state of kansas. Mr. Andrew smith, director of the ftcs bureau of Consumer Protection. The founder and ceo of knowb4 inc. While the food and Drug Administration was not able to join us today, the agency has been active in protecting consumers around this pandemic and provided written testimony and agreed to respond to questions for the record from the Committee Members as well. Finally, u. S. Telecom provided a letter for the record describing the collaborative efforts of companies in the trace back group to actively trace and identify sources of robo calls that only increased in frequency during the pandemic. I ask that this letter be submitted for the record. Without objection it is. With that, i turned to senator blumenthal for his Opening Statement. Sen. Blumenthal thank you for having this hearing. In the wake of almost every disaster in this country, no matter how dire, there are always bottom feeders and con artists who exploit peoples fears and hopes. We all know, probably everybody watching and listening today knows there is no cure for covid19 and there is no vaccine or other medical prevention. That has not stopped the con artists and scams from exploiting peoples fears and hopes. In fact, they have defied both science and common decency in taking advantage of people financially. So, the scams range from the invasion of privacy and products that are useless, price gouging, mortgage and Student Loan Relief scams, false cures and fake tests, cons. But more than just financial loss, people face Real Health Care danger. False cures can kill. False cure not only take peoples money, they can kill, and deception can be deadly. So, there are a variety of products, and in fact, the ftc has issued 255 warning letters. Those 255 companies were defrauding and endangering consumers before they were caught. Those 255 companies are among hundreds of others that are still doing business. Those 255 companies have paid no cost, none, for breaking the law and harming people, despite the ftcs warning letters, and they are still doing business. They may have changed their marketing pitches to be slightly less deceptive and misleading, but they are still out there. And if warning letters will not protect consumers, we need stronger action. On march 9th, i wrote to the ftc e agessive action to stop the marketing and sale of fake coronavirus cures, warning letters to marketers, they simply fail to give consumers fair notice. They fail to inform. They fail to correct wrong information and they sent no real signal to the market. There needs to be real deterrence, not just just warning letters for or a slap on the wrist. Last monday i wrote the ftc and fda on the dozens of unsafe supplements being sold on amazon and other Online Marketplaces that claimed to kill viruses. Amazon still has supplements, tonics, probiotics, in the search for the covid here. We need to stop the snake oil salesman. I mentioned a number of them in my march 9th letter. In particular, tv evangelist jim baker, who recently promoted a celluloid silver on his show, claiming that it would eliminate viruses such as coronavirus. Another one, cellular silver itself claims to, quote, achieve 99. 99 complete kill against 660 microorganisms. Again, this is deception. We find these kinds of utterly false ads for aromatherapy, vivify, herbal amy. There is a list, and it is growing. Many of us i think hope that this crisis would pass swiftly and that we could return to a normal life, both the Health Care Crisis and the economic crisis. We are six months into this pandemic. There is no end in sight to this her and does national suffering. We have seen hardship and heartbreak. It has been aggravated, not reduced, by many of these false and misleading promises for products that threaten health care, endanger lives, take money from people unfairly and illegally, but also pose grave dangerous to Public Health, and if we can do something about them, mr. Chairman, we will accomplish a lot of good for the american people. Thank you. Senator blumenthal, thank you. We now will hear testimony from our witnesses and we will begin with the honorable derek schmidt, attorney general, state of kansas. Thank you, mr. Chairman. Chairman moran, thank you for the invitation and thank you for accommodating our remote testimony today. I will admit it is the first time ive presented congressional testimony without leaving the office of the attorney general, so i hope it lives up to your needs. Mr. Chairman, both you and the Ranking Member have laid out very well the framework in which we operate as a state level enforcement agency. You have my written testimony. I certainly wont read it. I thought i would use my minutes here for oral presentation to just emphasize a few of the highlights that we have already presented to you in writing. Let me first discuss one case, for the purpose of illustrating, not because that case is necessarily all that extraordinary, but it illustrates some of the types of Enforcement Actions at the state level that we are engaged in. I had already filed a lawsuit prior to the covid pandemic against a defendant. A fellow i actually have both civil and criminal litigation against impending against him, so i have to say the criminal charges are only accusations and that it is presumed innocent unless proven guilty. But on the civil side, we accused him of violating our states consumer laws by selling autopsy services, Tissue Recovery Services and other related types of Services Without having the qualifications to do so. We had him enjoined from operating with the state of kansas from Court Ordered during our litigation and then along came covid and we received information after the pandemic erupted in the public consciousness that our enjoined defendant had set up some new companies and was peddling essentially the same services, although in a new package outside of kansas, beyond where he was enjoined, and specifically he marketing his unqualified services to families and individuals who had loved ones that were deceased as a result of covid to do autopsy and tissue recoveries, which in my view, he is entirely unqualified. Because we have a case already pending, the investigation for the Additional Information did not take long. We were able to go back in front of our judge and receive an expanded temporary restraining order that prevents him from representing himself on any of this, including on the covid related services, and also bars him from leaving the state of kansas without case by case permission from our court. I use this case just to illustrate, you know, we often talk at the broad policy level about sort of the collective impact of cases and behaviors by groups of defendants, groups of companies, whatever it may be, and those are certainly important, but at the end of the day, Enforcement Actions, at least at the state level, typically boiled down to one defendant or an associated group of defendants, one group of victims, and one group of misconduct. So those are the types of cases we wind up dealing with with some regularity. Moving beyond that individual case, let me just mention some of the types of complaints, of scams and related misconduct we have been receiving since the pandemic erupted on this stage in march. We have investigations pending with respect to each of these categories. I wont be able to discuss the particular investigations, but i can certainly talk about the general approach and subject matter. , mr. E say, as both you chairman, and the Ranking Member already pointed out, the crooks and scam artists use the same tools they always use, trying to get into peoples pocketbooks. They just changed the messaging to reflect the current concerns about covid and to prey upon what people are currently worried about. We saw, for example, the first wave that we saw come in that continues were text message scams related to Contact Tracing, something that back in march most americans had never heard of. And the Text Messages would come in and claim along the lines that this is an official communication letting you know that you have been in contact with a person who has tested positive for covid19. Please click on this link in order to get more Public Health information to help you know what you need to do next. Of course, it was a phishing email. It provided an invitation to provide personal information that had nothing to do with any legitimate Public Health purpose. We put out an early consumer alert in our state on that to raise awareness and try to help people avoid the problem, because it is obviously much easier to prevent people from becoming a victim than it is to chase down their money when the scammers operate outside of our jurisdiction, often from offshore. Another type of scam that we have seen a lot of complaints on, as already mentioned by senator blumenthal, are covid prevention and treatment scams. It is everything you have read about, but they come in and all the usual way, sometimes by robocall, and sometimes by personal call, sometimes by text message, sometimes by email. We have seen ppe scams, plans to claims to be able to sell ppe to folks and then either there or it existed, but was subpar or it existed and it was good, but it was stolen and it was not theirs to sell. We have seen all of the above. We have seen scams related to stimulus checks, communications saying, folks, we are from the Small Business administration, we are from the irs, we are from fill in the blank Government Agency and we are here to assist you in making sure you get the payment to which you are entitled. And we have seen fraudulent unemployment claims, usually the objective there is to get personal information and a payment based on some type of identity theft. Finally, mr. Chairman, from our standpoint, the ability to cooperate with federal agencies is really critical. The vast majority of law country,nt in this especially on scams and frauds, is conducted in the state and local level. But we are geographically and jurisdictionally limited. And it makes no sense for us to be doing our thing in the territory that is kansas and for the federal agencies to be doing their thing in the territory that is kansas and us not to be coordinating. E always coordinate closely we have a very good working relationship with principal agencies you would expect for this type of work, whether it is hhs, oig, or the fbi, secret service, among others and we have readable those efforts during covid. Two things i might suggest for consideration on a policy standpoint related to that. I will close with this, mr. Chairman. One is i do think there is room and i suggested this to you before covid, and i think covid has proven the point i think there is room for a more structured relationship between statelevel enforcers and our regional federal Law Enforcement partners. The i mean by that is federal agencies receive a lot of information. We receive a lot of complaints from citizens. Sometimes they come from federal agencies. The feds are limited, in terms of size they choose to look at. The reality is they have to make choices and they look at the larger cases. That is perfectly understandable. Sometimes, and we have done this on occasion, it is helpful when our federal partners have received a complaint, and they work it up in part because they are trying to figure out what they got, and they have a violation of the law but it is not raise to the level of prosecution. It is very helpful, if they we have done that particularly with hhs, oig, and it makes us happy, because it gives us more happy,and it makes them because it is cases that they already invest time and effort in. And the second and final thing i would suggest for consideration, mr. Chairman, there is one thing pending in the senate that would be very helpful, i think, in advancing our capacity on some of this. It is senate bill 79. I know you are a cosponsor. Other members on the committee have talked about it. It is a measure that has been pending for years now. I would hope it would be part of the next stimulus bill, if there is one. It would remove what i think is an arbitrary area in federal law that prohibits states from using the medicaid control units to detect or prosecute patient medicaid patient abuse, as opposed to systemic fraud. But patient abuse, unless that abuse occurs at an institutional setting. What that means is, somebody who is ripping off and defrauding in a medicaid beneficiary in a Health Care Setting, trying i to sell them bogus cures or whatever it may be for covid, i currently am not allowed to use the assets, which are federallyfedera funded, and therefore subject to limitation, to investigate and prosecute that. I have to find out how to do that with other resources. It would be very helpful if that limitation were lifted swiftly, because it would allow us to deploy already existing and inplace prosecution resources investigation and prosecution resources to address noninstitutional covid scams. Thank you, mr. Chairman, for the opportunity to present the information. General, thank you for your help in protecting consumers. Thank you for your specific suggestions about actions. Now we turn to our next witness, mr. Andrew smith. He is the director of the bureau of the Consumer Protection at the federal trade commission. Mr. Smith thank you. I am andrew smith, director of the federal trade commissions bureau of Consumer Protection. My written statement represents the views. Not necessarily the views of the commission or individual commissioners. I am pleased to appear before you today to discuss protecting americans from covid19 scams. Despite the disruption, the bureau has managed to be productive, particularly with respect to scams taking advantage of covid19 fear and confusion. Many are outlined in my written testimony, but what is truly remarkable is how the entire bureau has visited to the occasion and made a major contribution against covid scams. Each of our eight divisions and eight regional offices is pulling its weight, while also keeping up with project loads and cases. Our marketing Practice Division is taking on robo calls. Businessous opportunities. Our Privacy Division is focused on Contact Tracing and issues around since learning. Our Enforcement Division is taking on fulfillment scams that promise ppe to consumers, but that never delivered. Collecting and analyzing complaint data for public consumption and improve Law Enforcement targeting. It remote courtroom appearance these, testimony and production. Until graphic shareable videos and other material in five different languages. It has also been conducting extensive outreach directly and through our partners in the media advocacy organizations and trade groups. Our regional offices are doing all of the above, actively engaged in investigation, litigation, and tros. Outreach, outreach, and more outreach, with state and regional partners. In fact, in the car on the way up here, i got email about a joint a that our