- A Conversation With California Supreme Court Justice Martin J. Jenkins
- Aam V. Robert Bonta: An End To California Pharmaceutical Legislative Reform?
- Big Stakes Antitrust Trial: In re National Collegiate Athletic Association Athletic Grant-in-aid Cap Antitrust Litigation
- Big Stakes Merger: Federal Trade Commission, Et Al. V. Thomas Jefferson University, Et Al.
- Executive Committee
- Message From the Chair
- Message From the Editor
- No-poach Agreements: Increasingly Risky
- Recent Developments In Antitrust and Unfair Competition Law
- Table of Contents
- Views From the Top: Managing Antitrust Practice In Changing Times
- Combatting Covid Through . . . Consumer Protection? a Multi-jurisdictional Approach To Protecting Public Health Through Enforcement of Consumer Fraud Laws
COMBATTING COVID THROUGH . . . CONSUMER PROTECTION? A MULTI-JURISDICTIONAL APPROACH TO PROTECTING PUBLIC HEALTH THROUGH ENFORCEMENT OF CONSUMER FRAUD LAWS
Written by Christina Tusan, William Pletcher, and Alex Bergjans1
We have been impressed, unfortunately, with the ability of the SARS-CoV-2 virus, as well as associated scams, to mutate into succeeding waves of variants over the ongoing course of the pandemic. Courts also have long recognized the ability of frauds to evolve to ever-changing conditions.2 The novel, global, and multiyear nature of the COVID-19 crisis—along with the evolving scientific consensus and shifting regulatory environment regarding COVID-19 testing and treatment—allowed enterprising scammers to engage in deceptive and unlawful business practices that existing legal authority and tools were not specifically designed to address.
Fortunately, the adaptability of consumer protection laws—often described as sweeping in scope3—made them an effective tool for addressing new consumer frauds that rapidly developed in the face of the COVID-19 pandemic. This emergency demanded that consumer protection prosecutors and regulators creatively use this existing, adaptable authority to find ways to protect the public from deceptive and, at times, dangerous business practices. It also created the opportunity for prosecutors, regulators, and policymakers to reevaluate and rethink ways that consumer protection laws should be adjusted to more effectively protect the public during the long-term and global environmental and public health emergencies we will face in the future.
This article will discuss: (1) the unfair and deceptive business practices that arose in the COVID-19 pandemic, (2) the consumer protection tools and authorities available to combat those practices, (3) how federal, state, and local regulators and prosecutors used existing consumer protection authority—such as California’s Unfair Competition and False Advertising Law, the Federal Trade Commission Act, and other states’ Unfair & Deceptive Acts and Practices laws—to halt and deter COVID-19-related unlawful business activities, and (4) how consumer protection tools can be improved to better respond to future crises.
II. THE NOVEL CORONAVIRUS ARRIVES IN THE UNITED STATES; COVID-19 RELATED UNLAWFUL AND DECEPTIVE BUSINESS PRACTICES FOLLOW
In December 2019, health officials identified an outbreak of a deadly respiratory illness caused by SARS-CoV-2, a novel coronavirus, in Wuhan City, China.4 In late January 2020, the Centers for Disease Control and Prevention ("CDC") confirmed the first case of COVID-19 in the United States.5 On January 31, 2020, the U.S. Secretary of Health and Human Services declared the SARS-CoV-2 virus a public health emergency, and the White House 2019 Novel Coronavirus Task Force announced new travel policies to be effective on February 2, 2020.6 In early March 2020, after more than 1,600 Americans were diagnosed with the disease,7 the World Health Organization declared COVID-19 a pandemic.8 The federal government declared a national state of emergency9 and state and local governments quickly followed with their own emergency declarations.10
Policymakers at all levels of government issued orders and implemented guidelines aimed at "flattening the curve" and slowing the spread of COVID-19 to keep hospitals and healthcare facilities from being overwhelmed by patients infected with this highly contagious disease.11 New York State, which suffered the largest outbreak in the early pandemic, shut down schools on March 16, 2020 and bars and restaurants the following day.12 On March 19, 2020, the Governor of California and the Los Angeles County Board of Supervisors issued emergency "Safer at Home" orders mandating that residents shelter in place except to engage in "essential activities" like buying food or medicine.13 New York followed suit one day later when it ordered that all non-essential workers stay home.14
A vital element of all COVID-19 mitigation and suppression strategies was testing for the disease and isolating those who contracted it or were in close contact with an infected person. However, tests were not readily available in California or nationwide during the first several months of the pandemic. For example, as of March 11, 2020—a whole week after California declared a public health emergency—the Los Angeles Times reported that only 1,138 people in California had received a COVID-19 test in a public health lab and the state only had an additional 7,675 tests available for its approximately 40 million residents.15 The media reported on national testing shortages well into the summer of 2020, months after the federal government first declared a state of emergency.16
Mass public fear, confusion, and uncertainty accompanied the arrival of COVID-19 in the United States. Early in the pandemic, doctors, public health officials, and the pharmaceutical industry had not yet developed therapeutics effective against COVID-19.17 In turn, many members of the fearful public bulk-purchased various purported "treatments" of dubious efficacy in an effort to protect and treat themselves and their families. The public fear was exacerbated by the fact that at the beginning of the state of emergency scientists and public health officials did not know precisely how the novel coronavirus spread.18 One of the popular early theories was that the virus spread through infection by "fomites"—inanimate objects such as packages, doorknobs, and surfaces helping to spread infection, indirectly, from person-to-person.19 The fear of fomite transmission led to a nationwide run on and subsequent shortage of
disinfectant products, along with related price gouging of those products.20
COVID-19 illustrated that public health emergencies can quickly transform into consumer protection emergencies. Deceptive business practices thrive in atmospheres of confusion and fear. Scarcity, real or perceived, promotes price gouging. And desperate consumers are more likely to buy products and services advertised with promises and representations that are too good to be true than they would in calmer situations where they can exercise more scrutiny. The pandemic produced significant opportunities for enterprising scammers and unscrupulous businesses to advertise and sell unauthorized COVID-19 test kits and fake COVID-19 cures and treatments, as well as to price-gouge essential products and services.21
A. UNLAWFUL SALES OF UNAPPROVED COVID-19 TEST KITS
Some of the earliest and most prominent consumer-facing scams that arose from the COVID-19 pandemic were the advertising and selling of unauthorized "home" COVID-19 test kits.
At the beginning of the pandemic, the Department of Health and Human Services ("HHS") and the Food and Drug Administration ("FDA") took steps to increase the supply and availability of COVID-19 tests. HHS declared a state of emergency and invoked Section 564 of the Food, Drug, and Cosmetic Act, which allowed the FDA to issue Emergency Use Authorizations EUAs allowing for the development, distribution, and use of medical products, including COVID-19 tests, that the FDA had not formally approved under its normal procedures.22 Because of the novelty of the virus and the need to make available hundreds of millions of tests for it, the FDA was required to engage in a delicate balancing act of simultaneously promoting the creation of a new industry while ensuring that the testing products met standards of scientific accuracy and reliability.
To do so, the FDA issued its Policy for Diagnostic Tests for Coronavirus Disease-2019 ("Interim Guidelines") governing the manufacture and distribution of COVID-19 tests developed under the EUA process, including tests that applied for but had not yet obtained EUA approval. The Interim Guidelines announced the FDA’s policies regarding the development and use of COVID-19 tests in four sections:
- Section IV.A: clinical labs developing tests and the process for received Emergency Use Authorization;
- Section IV.B: states setting their own validation standards;
- Section IV.C: commercial manufacturers of diagnostic tests that are provided to laboratories or healthcare providers prior to EUA submission; and
- Section IV.D: commercial manufacturer development and distribution, and lab development and use of serology tests prior to or without an EUA.23
Reflecting the need for testing capacity, the policies permitted manufacturers of COVID-19 tests to sell, use, and distribute them even before the FDA granted an EUA application, provided that an application for the device was filed with appropriate validation paperwork.24
Although it generally exercised regulatory flexibility, the FDA’s policy drew certain bright lines, most notably the requirement that the use of tests under the policy be limited to laboratories or at the "point-of-care,"25 and not at home unless expressly authorized by the FDA. Due to the FDA’s concerns about the sensitivity of the tests, the difficulty and potential danger of having individuals self-collect saliva and/or nasal tissue, and (in the case of serology or blood tests) the reliability of the tests themselves,26 the FDA had "not authorized any COVID-19 test to be completely used and processed at home" even months after the state of emergency was declared.
Despite the best efforts of the FDA and other public health authorities, "tests of ‘frankly dubious quality’" flooded into the stream of commerce, leading to false positives and false negatives.27 The purveyors of these unreliable and unauthorized test kits relied on the FDA’s regulatory flexibility (and the accompanying uncertainty) to dupe consumers into believing that their tests were approved or otherwise permitted by the FDA. They also filled an unmet demand for "home" test kits that would allow customers to diagnose the disease while socially distancing and self-isolating.
The early pandemic saw a wave of unauthorized test kits that did not comply with the FDA’s Interim Guidelines introduced to the market. The advertisements for these tests—many of which were serological, a category of tests the FDA deemed so unreliable that it announced they "should not be used as the sole basis to diagnose COVID-19"—made various false, misleading, and unsupportable representations about their accuracy, reliability, and regulatory approval. Some entities selling such tests included:
- Yikon Genomics, Inc., which allegedly advertised and sold a SARS-COV-2 IgG/IgM At-Home Screening Kit that it represented used a simple finger stick procedure to test the presence of the aforementioned antibodies in the bloodstream, making it possible to detect current or recent viral infections of COVID-19.28
- RootMD, Inc., which allegedly sold an "at-home" COVID-19 exposure and immunity kit for $249.00 per test, and claimed that "[w]hile the test has not yet completed the several month investigation periods by the FDA to be labeled as approved, they did issue a statement on March 16th allowing its use under emergency provisions."29
- Applied BioSciences, Inc., which allegedly advertised a "home" COVID-19 test that it represented was a "HUMAN 15 MINUTE ACCURATE, AFFORDABLE AND RELIABLE FINGER PRICK CORONA VIRUS COVID-19 BLOOD TEST" that "can be used for Homes, Schools, Hospitals, Law Enforcement, Military, Public Servants or anyone wanting immediate and private results."30
- Wellness Matrix Group Inc., which allegedly sold an "FDA Approved Home Test Kit" that it represented could deliver a test result "in 10 minutes, without a prescription and no special equipment needed. Best of all, it’s in the privacy of your own home."31
B. TWENTY-FIRST CENTURY SNAKE OIL: THE EMERGENCE OF FAKE COVID-19 "CURES"
Various media figures, self-styled entrepreneurs, and businesses advertised purported COVID-19 cures and treatments that the FDA had not studied or approved for use against the disease.
The types of "cures" and representations ranged from some exaggerating the efficacy of common nutritional supplements like Vitamin C to others claiming that they invented miracle pills and injections that could eradicate COVID-19.32 One of the highest profile and most commonly advertised miracle cures was colloidal silver.
Colloidal silver is a purported "nutritional supplement" consisting of "tiny silver particles in liquid" that has been advertised for decades as a cure-all for everything from the common cold and chest congestion to cancer and AIDS.33 In reality, the FDA has warned against the use of colloidal silver since 1999, noting that it not only is unsafe and ineffective against any disease or condition, but also has serious side effects and can permanently turn a person’s skin bluish-gray.34 Nonetheless, many businesses and organizations advertised and sold colloidal silver as both a prophylactic and therapeutic treatment for COVID-19 that could "usher" coronavirus out of a person’s body and "prevent the disease totally and completely"35 or kill the coronavirus within 12 hours.36
Other companies attempted to pitch more common supplements as COVID-19 cures. Some claimed that, when taken in high doses, Vitamin C "acts as an antiviral drug" that could kill COVID-19.37
Others advertised radish paste as "a must-have product for the protection and prevention of the COVID-19."38 And certain companies represented that CBD oil prevented infection with COVID-19 by decreasing a person’s stress and thereby strengthening the immune system.39 These, and other representations about similar products, were not supported or approved by the FDA.40 Yet false and misleading claims of cures and treatments for COVID-19 proliferated in the early pandemic and remain prevalent even after the development and widespread availability of vaccines and effective therapeutics.41
C. COVID-19 PRICE GOUGING
Price gouging also appeared at the beginning of the pandemic. As the need and demand for cleaning supplies, disinfectant products, and personal protective equipment such as surgical and N95 masks became dire, the prices for these products skyrocketed in certain marketplaces and storefronts.
Price gouging was not just identified at traditional brick-and-mortar stores, but was also seen on online marketplaces like Amazon42 and Craigslist. As the first global emergency in the e-commerce era and one that required people to stay home and avoid crowded commercial areas as much as possible, it was inevitable that the COVID-19 pandemic would create the opportunity for profiteering online. The pandemic price gouging was blatant. One online retailer allegedly increased the cost of N95 masks from $14.95 per ten pack to $104.99, and another allegedly increased the cost of N95 masks from $39.99 per pack to $269.99.43 One online retailer allegedly advertised and sold a two-liter bottle of hand sanitizer for $249.99.44
Online marketplaces offer opportunities for new market entrants and small-time operators to access the global marketplace at relatively low start-up costs.45 But unlike well-established vendors with long-term incentives to comply with laws and regulations, these new market entrants initially encountered few barriers to earning a quick profit by hoarding and selling goods related to the pandemic at inflated prices. This not only increased the number of price gougers, but it also helped create a game of enforcement whack-a-mole with new violators appearing moments after others were shut down. Fortunately (and likely understanding their own potential risk and exposure), a number of online marketplaces, including Amazon, partnered with law enforcement to identify the price gougers operating on their sites for prosecution.46
D. COVID-19 PCR TESTING FRAUD AND POP-UP TESTING SITES
The need for rapid and reliable testing led to the creation of numerous start-up companies purporting to provide PCR testing services to customers. PCR (or polymerase chain reaction) tests for COVID-19 are molecular tests that analyze specimens taken from a person’s upper respiratory system for RNA from the coronavirus. According to public health experts, "[t]he PCR test has been the gold standard test for diagnosing COVID-19 since authorized for use in February 2020."47 PCR tests are the types of tests most frequently required by most airlines, governments, and businesses.48
Although PCR tests were available (often for free) at schools, businesses, traditional healthcare providers, and government-operated sites, private testing companies offered a key advantage: for a premium, they guaranteed results quickly. One company, the Center for COVID Control, allegedly promised customers lab results "within 24 to 48 hours."49 The promise of speed is an important inducement as many airlines and organizations require people to present negative test results from samples taken within 72 hours for entry.50
Unfortunately, the promises made by some of these start-up testing companies appear to have been false. For example, the Center for COVID Control, an Illinois company with up to 275 testing sites nationwide, allegedly routinely failed to deliver test results within its promised deadline. Worse, to cover up their false advertising, some companies allegedly created false negative test results—
including for some customers whose samples were never actually analyzed—and sent them to customers. The Center for COVID Control, for instance, is accused of sending "negative" antigen test results to customers that only took a PCR test and "negative" results to some customers who never took a test at all.51
During the COVID-19 Omicron variant surge of late 2021 and early 2022, a significant number of pop-up street vendors opened in major cities and began offering purported PCR testing to meet the increased demand.52 Many of these sites promised to return test results to consumers in less than 48 hours and claimed that their service was free.53 However, a number of them allegedly failed to deliver any test results to their customers.54 Moreover, some of the sites allegedly required customers to provide insurance and personal identifying information—including their social security numbers—stoking concerns that the sites were created to engage in identity theft or insurance fraud.55 The pop-up testing sites managed to slip through the patchwork of federal, state, and local regulations governing COVID-19 testing and street vending. The fact that the sites claimed to be offering FDA-approved tests that were analyzed by Clinical Laboratory Improvement Amendments ("CLIA")-certified laboratories limited the ability of federal regulators to step in, and the fact that the sites claimed to offer the tests for free and the fact that enforcement of some street vending ordinances was suspended during COVID-19 made it more difficult to utilize local ordinances and laws regulating street vending.56
III. USING THE UNFAIR COMPETITION LAW, FALSE ADVERTISING LAW, SECTION 5 OF THE FTC ACT, AND PRICE GOUGING LAWS TO PROTECT CONSUMERS FROM A NEW SET OF SCAMS ASSOCIATED WITH THE PANDEMIC
The pandemic created unprecedented challenges—both in volume and novelty—for consumer protection prosecutors and regulators. Although law enforcement could utilize some authority—like price gouging laws—triggered by the declaration of a state of emergency, traditional consumer protection laws remained the primary tools available to the government to curb these unlawful practices.
These authorities—such as California’s Unfair Competition Law and False Advertising Law, the Federal Trade Commission Act, and other state Unfair Deceptive Acts or Practices ("UDAP") laws—were largely able to meet the demands created by the pandemic. The statutes, which broadly prohibit deceptive, misleading, unlawful, and unfair conduct, offer both flexibility (allowing their use against any industry or practice) and powerful remedies (interim injunctive relief, restitution, and mandatory civil penalties) that encourage swift enforcement and early resolution. They were used at all levels of government to respond to pandemic-related scams.
A. THE UNFAIR COMPETITION LAW IS AN IMPORTANT TOOL TO HALT DECEPTIVE AND UNLAWFUL PANDEMIC-RELATED BUSINESS PRACTICES
The Unfair Competition Law ("UCL"),57 which expresses the public’s right to protection from fraud, deceit, and unlawful business acts and practices,58 serves as a key tool in combatting COVID fraud. "Its coverage is sweeping, embracing anything that can properly be called a business practice and that at the same time is forbidden by law."59 To establish a violation of the UCL, a plaintiff must show either an "unlawful, unfair, or fraudulent business act or practice,"60 each of which is a distinct violation and theory of liability.61 "[A] practice is prohibited as ‘unfair’ or ‘deceptive’ even if not ‘unlawful’ or vice versa."62
Each of the three prongs of the UCL prohibit different practices. The unlawful prong prohibits "any practices forbidden by law, be it civil or criminal, federal, state, or municipal, statutory, regulatory, or court-made."63 It "borrows" the elements from other laws and makes them actionable as unlawful business practices; if a
practice violates an existing predicate law, it violates the UCL.64 The fraudulent prong prohibits any fraudulent business act or practice, even if it does not rise to the level of common law fraud.65 Under the UCL’s fraudulent prong, "[a] violation can be shown even if no one was actually deceived, relied upon the fraudulent practice, or sustained any damage. Instead, it is only necessary to show that members of the public are likely to be deceived."66 Finally, the unfair prong prohibits conduct that (1) threatens an incipient violation of an antitrust law, (2) violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law; or (3) otherwise significantly threatens or harms competition.67
The law is intentionally broad. It applies to all manner of business practices across industry, including highly regulated business practices such as the advertisement and sale of medical devices and treatments.68
Perhaps most importantly for enforcement purposes, the UCL is a "strict liability" statute with powerful remedies, including preliminary and permanent injunctive relief, full restitution (without the corresponding demand to identify all consumer victims), and civil penalties of up to $2,500 per violation. On top of all that, courts have held that the UCL creates a low bar to establish individual officer liability under either the control test69 or responsible corporate officer doctrine.70 This combination creates both the ability for law enforcement to quickly halt the unlawful practices at issue and the leverage to obtain early resolutions from defendants.
B. THE FALSE ADVERTISING LAW, WHICH MERELY REQUIRES A LIKELIHOOD OF DECEPTION, IS A POWERFUL AUTHORITY TO FIGHT PANDEMIC SCAMS
The False Advertising Law ("FAL"), which makes it unlawful for any person to knowingly or negligently make any public statement relating to real or personal property or services that is untrue or misleading with the intent to dispose of real or personal property, or perform the services,71 is also an important law that can be used to effectively combat pandemic-related fraud. Government prosecutors do not need to prove intent to deceive, reliance, fraud, or damages.72 A violation of the FAL occurs when the statement is made, and once it occurs it cannot be eliminated by subsequent disclosures.73 Thus, California courts have repeatedly held that a violation occurs at the time a consumer is solicited, regardless of whether the consumer purchases the goods or services offered. Identifiable victims are also not required; as the FAL prohibits just the likelihood of deception and does not require proof that anyone was actually deceived.74
The FAL asks whether the "statement" at issue is likely to mislead members of the public.75 Thus, it prohibits "not only advertising which is false, but also advertising which, although true, is either actually misleading or which has a capacity, likelihood or tendency to deceive or confuse the public."76 And "[a] perfectly true statement couched in such a manner that it is likely to mislead or deceive the consumer, such as by failure to disclose other relevant information, is actionable under" the FAL.77 Moreover, the evidence required in a false advertising case is the advertising itself. Government prosecutors are not required to present extrinsic evidence or consumer surveys to prove that the advertising is likely to mislead.78
And like the UCL, the FAL has powerful interim and permanent remedies in the form of injunctive relief, restitution, and civil penalties of up to $2,500 per violation and a relatively low bar to establish liability both for an entity and individual officer.79 This too creates opportunities for prosecutors and regulators to swiftly halt misleading and deceptive misconduct.
C. SECTION 5 OF THE FEDERAL TRADE COMMISSION ACT
Section 5 of the Federal Trade Commission Act ("FTC Act") is an important tool that the FTC used
to protect consumers during the pandemic. This section prohibits "[u]nfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce. . . ."80 Courts have held that an act is deceptive if there is a representation, omission, or practice that is likely to mislead consumers acting reasonably under the circumstances, and that representation, omission, or practice is material.81 In order to establish that a representation is likely to mislead, the FTC must establish that (1) the representation was false or (2) the advertiser lacked a reasonable basis for its claims.82 A misrepresentation is material if it involves facts that a reasonable person would consider important in choosing a course of action.83 Both express claims—"ones that directly state the representation at issue"—and implied claims—other claims that do not fit within the definition of "express claims’—made in advertising can be actionable.84 Consumers are not required to question the veracity of express claims because they are presumed to be material.85
In determining an alleged violation of Section 5, courts evaluate the "net impression" created by the representation to determine if it is deceptive.86 Proof that defendants’ misrepresentations were made in bad faith or with an intent to defraud or deceive is not required.87 Additionally, defendants who attempt to rely on disclaimers to change the apparent meaning of a claim must include disclaimers that are prominent and unambiguous.88 A violation also occurs when a seller "induces the first contact through deception, even if the buyer later becomes fully informed before entering the contract,"89 a practice sometimes referred to as a "deceptive door opener."90
State consumer protection laws like the UCL are often referred to as "Mini-FTC Acts" because of similarities between the laws. Much like the UCL and FAL, under Section 5 "[a]dvertisements as a whole may be completely misleading although every sentence separately considered is literally true"91 and "[t]he failure to disclose material information may cause an advertisement to be deceptive, even if it does not state false facts."92 Like government prosecutions under the UCL and FAL, the FTC also does not need to prove that each misled consumer relied on the claims at issue93 as courts have held that requiring the FTC to prove individual reliance is an unreasonable burden.94 Although the FTC is not required to prove individual reliance by each consumer, a standard that tracks the UCL and FAL requirements for prosecutors, there is a difference in how the standard is applied. Under Section 5 the FTC has a unique burden-shifting requirement that does not exist under the UCL and FAL. Once the FTC proves material, widespread misrepresentations, "the burden shifts to the defendant to prove the absence of reliance."95
Another difference between the UCL and the FTC Act is that the FTC Act spells out a specific requirement concerning substantiation. Under Section 5, a representation is deceptive if the maker of the representation lacks a "reasonable basis" for the claim at the time it is made.96 If a claim is made without adequate substantiation evidence, the maker necessarily lacks a reasonable basis.97 Under the FTC Act, "[d]efendants have the burden of establishing what substantiation they relied on for their product claims"98 and "[t]he FTC has the burden of proving that Defendants’ purported substantiation is inadequate. . . ."99 In determining whether an advertiser has satisfied the reasonable basis requirement, the court must determine whether an advertiser possessed the necessary level of substantiation for that claim at the time it was made.100
But perhaps the most significant difference between the FTC Act and UCL is the remedies. The UCL allows plaintiffs and public prosecutors to obtain restitution of any money or property obtained through unfair competition.101 Section 13(b) of the FTC Act—the Act’s primary provision governing remedies when the FTC seeks judicial redress while its administrative proceedings against a defendant are still pending—provides that "in proper cases the Commission may seek, and after proper proof, the court may issue, a permanent injunction"102 and was long interpreted
to empower courts to grant the FTC "’any ancillary relief necessary to accomplish complete justice,’ including restitution."103 However, in the 2021 case, AMG Capital Management, LLC v. Federal Trade Commission,104 the Supreme Court adopted a far more limited interpretation of Section 13(b) as permitting only injunctive, not monetary relief.105 In reaching this decision, the Court analyzed both the language of the specific provision at issue—which only expressly permitted courts to grant injunctive relief—and the overall design of the FTC Act, which expressly permits courts "to impose limited monetary penalties and to award monetary relief in cases where the Commission has issued cease and desist orders, i.e., where the Commission has engaged in administrative proceedings."106 The Court held that its interpretation "read[s] § 13(b) to mean what it says" and "produces a coherent enforcement scheme."107 The Court has thus recognized the FTC’s ability to obtain monetary relief following administrative proceedings under Sections 5 or 19—but has taken a narrow reading of the types of relief currently available under Section 13, circumscribing monetary orders.108
D. PRICE GOUGING LAWS
California’s price gouging law109 was a helpful tool to combat unlawful business practices in the pandemic. The price gouging law prohibits—upon the declaration of a national, state, or local emergency and for thirty days thereafter—anyone from selling certain goods, services, or emergency supplies for a price more than 10 percent greater than the price charged by that person for the same items or services immediately prior to the emergency declaration.110 The law also prohibits rent increases of more than 10 percent in the first 30 days following the declaration of an emergency and for any period of time after the declaration has been extended.111
The provision of the law governing the sales of goods and services was a helpful tool in the beginning of the pandemic. The law, however, was designed to respond to shorter-term emergencies, like natural disasters, but not longer-term crises, which the COVID-19 pandemic ended up becoming. Moreover, the law that was in effect at the beginning of the pandemic failed to account for "crisis-entrepreneurs"—persons or entities that only start selling goods after the declaration of emergency and therefore have no original price to set the statute’s required baseline—or goods, like COVID-19 test kits, that are not available or even invented until after the state of emergency is declared.
These limitations required policymakers in California to adopt more creative solutions and approaches to curb price gouging. The City of Los Angeles passed a price gouging ordinance that (1) is in effect throughout the entire life of a state of emergency and not just the initial 30 days, (2) does not limit its prohibition of price gouging to persons or businesses that only sold items before the emergency declaration, and (3) does not limit its prohibition to price gouging on items that were in existence and available pre-emergency.112 California’s price gouging law, Penal Code Section 396, also was amended during the pandemic to include a new requirement that prohibits new market entrants from charging more than 50 percent more than their costs.113 And during the Omicron surge of late 2021 and early 2022, the Governor of California issued an executive order, described as being enforceable under Government Code Section 8665,114 prohibiting price gouging of COVID-19 home tests.115 Such an order was necessary because price gouging at issue occurred 18 months after Penal Code Section 396’s prohibition on price gouging during the COVID-19 pandemic expired and because the price gouging concerned items that were not in the stream of commerce at the time the emergency was declared.
On the other hand, the California price gouging law’s rental provision offered strong protection for consumers through the pendency of the COVID-19 emergency. Unlike the consumer goods provision, the section of the price gouging law governing rent prohibits raising rents by more than 10 percent both "for a period of 30 days following" the proclamation or declaration of emergency
and "any period the proclamation or declaration is extended by the applicable authority."116 In other words, the protection for renters remained in effect for the entire state of emergency. This provision, along with the nationwide eviction moratorium, protected renters from unfair price hikes and homelessness during the pandemic.
At the federal level, the Defense Production Act is a robust authority that can prevent both price gouging and hoarding. Under the Defense Production Act, the President—or the President’s authorized delegate—can, in a state of emergency, designate that certain goods or materials are needed to respond to the emergency and prevent any person from accumulating those materials "(1) in excess of reasonable demands of business, personal, or home consumption, or (2) for the purpose of resale at prices in excess of prevailing market prices."117 During the pandemic, President Trump authorized the Secretary of Health and Human Services to designate materials under the Defense Production Act.118 The Secretary designated various personal protective equipment, face masks, drugs, ventilators, disinfectant, and other related goods deemed necessary to combat the pandemic. The Defense Production Act could serve as a powerful predicate violation under the UCL’s "unlawful" prong to prosecute price gougers and hoarders.119
IV. LAW ENFORCEMENT EFFORTS TO HALT AND CURB PANDEMIC-RELATED DECEPTIVE AND UNFAIR BUSINESS PRACTICES
Government agencies and law enforcement worked actively to halt or otherwise thwart unlawful and predatory business practices during the pandemic. In addition to traditional tools such as criminal prosecution and civil law enforcement, the scale and volume of fraudulent practices required agencies to use informal methods such as warning letters and consumer education to curb the negative impact of the unfair and unlawful behavior.
A. WARNING LETTERS EFFECTIVELY ADDRESS LARGE NUMBERS OF EMERGING PANDEMIC SCAMS
As new and unexpected scams quickly emerged during the pandemic, the FDA, the FTC, and local law enforcement agencies attempted to thwart unlawful practices by issuing hundreds of warning letters. Issuing targeted warning letters has enabled law enforcement agencies to use their limited resources to seek voluntary compliance against pandemic-related violations instead of devoting time and resources to engage in protracted litigation.
1. THE FTC ISSUES WARNING LETTERS
Starting in late March 2020, the FTC began its efforts to eliminate false or misleading information about the pandemic from the marketplace by issuing letters "to warn companies that their conduct is likely unlawful and that they can face serious legal consequences, such as a federal lawsuit, if they do not immediately stop."120 The FTC sent more than 120 warning letters which, in some cases, were sent jointly with the FDA or the FCC.121 These letters were sent to companies making deceptive or scientifically unsupported claims about their ability to treat or cure COVID-19, multi-level marketers regarding health and earnings claims related to coronavirus, and Voice over Internet Protocol ("VoIP") service providers and other companies for "assisting and facilitating" illegal coronavirus-related telemarketing calls.122 The types of products were varied and included vitamins, herbs, colloidal silver, teas, essential oils, and other products pitched as scientifically proven COVID-19 treatments or preventatives, general therapy products, supplements, and herbal treatments, nebulizers, naturopathic and homeopathic treatments, hydrotherapy, and even freeze-dried horse milk.123
The FTC’s warning letters instructed targets to immediately remove their deceptive advertising, demanded a response within 48 hours, and advised targets that the Commission might
seek a federal court injunction and an order requiring money to be refunded to consumers if the conduct didn’t cease. The FTC notes that recipients overwhelmingly "t[ook] steps quickly to correct problematic advertising or marketing language and come into compliance with the law."124 Although the FTC described these warning letters as "the most rapid and effective means to address the problem,"125 it did pursue enforcement actions too.126
2. FDA ISSUES WARNING LETTERS IN CONJUNCTION WITH ENFORCEMENT ACTIONS
The FDA also took significant proactive steps to monitor firms marketing products with fraudulent COVID-19 prevention and treatment claims. In early 2020, the FDA, which received more than 1,486 reports of fraudulent products related to COVID-19, launched Operation Quack Hack "[t]o proactively identify and neutralize threats to consumers."127 As of July 15, 2021, this team had reviewed thousands of websites, social media posts, and online marketplace listings, resulting in more than 180 warning letters to sellers, more than 312 reports sent to online marketplaces, and more than 299 abuse complaints sent to domain registrars.128
The FDA primarily addressed false claims regarding the efficacy of masks, tests, and other COVID-19-related products by sending companies warning letters. It issued warning letters to companies concerning false statements about FDA approvals of KN95 masks that also were considered to be "adulterated" and "misbranded" because they were sold "without marketing approval, clearance, or authorization from the FDA."129 The FDA additionally confronted the dangerous sale of unapproved and misbranded testing kits, which unlawfully displayed FDA logos, by issuing warning letters to the responsible companies.130 Consumers’ unwitting use of unreliable tests is particularly dangerous as it could cause COVID-positive patients to unknowingly infect others.
During the pandemic, many companies made false and misleading extended efficacy claims about COVID-19 disinfectants that they claimed were safe and effective.131 The FDA sent warning letters to several of these companies.132 In those letters, it noted that false claims "endanger the public health by creating a false sense of security for the general public that may result in infrequent hand washing or the substitution of these products for protective gloves and clothing, which are the principal methods for protecting against the spread of diseases caused by pathogenic microorganisms."133The agency further warned of the consequence of such false claims:
[T]his product may give users the false impression that they need not rigorously adhere to interventions such as social distancing and exercising good hygienic practices that have been demonstrated to curb the spread of COVID-19. Users who do not follow these interventions are at increased risk for contracting COVID-19 and for spreading disease if they have been exposed to the virus, thereby prolonging the pandemic and increasing its associated morbidity and mortality.134
The FDA warning letters also advised that because the disinfectants are being offered to diagnose, cure, mitigate, treat, or prevent COVID-19 and affect the structure or function of the body, they are new drugs requiring FDA approval. The FDA advised that these unapproved sanitizers are not generally recognized as safe and effective for use under the conditions prescribed, recommended, or suggested in their labeling (namely to address COVID-19), and required preapproval.135
Another category of warning letters, often issued jointly with the FTC, involved purported "cures." The warning letters explained that the FTC Act136 prohibits companies from advertising that a product can:
prevent, treat, or cure human disease unless you possess competent and reliable
scientific evidence, including, when appropriate, well-controlled human clinical studies, substantiating that the claims are true at the time they are made. To make or exaggerate such claims, whether directly or indirectly, through the use of a product name, website name, metatags, or other means, without rigorous scientific evidence sufficient to substantiate the claims, violates the FTC Act.137
In one case, the FDA and FTC identified a nasal spray ad claiming that the product "kills viruses of the Coronaviridae family including the 2019 Novel Coronavirus and SARS at their point of entry into your body."138 The FDA made it clear that this product was considered an unapproved new drug that was misbranded and demanded that the company stop making deceptive claims.
B. ATTEMPTS TO EDUCATE THE PUBLIC ABOUT PANDEMIC SCAMS
Large-scale educational campaigns also protected consumers from COVID-19 scams. The FDA issued more than 325 news announcements on COVID-19 topics to alert the public about misleading and dangerous products.139 For example, the FDA issued warnings about hand sanitizers that its testing revealed contained hazardous ingredients.140 The FDA currently has a shockingly-long list of 273 unsafe hand sanitizers marketed during the pandemic that consumers should consult before purchasing sanitizer.141 The challenge for consumers in this context is evaluating which products they can safely purchase if they do not know about or have the time to regularly check the FDA list.
Another source of confusion occurs when companies use phrases like "FDA registration" and "EPA efficacy" to suggest approvals by these agencies for their COVID-related products. As the FDA notes, "When a facility registers its establishment and lists its devices, the resulting entry in the FDA’s registration and listing database does not denote approval, clearance, or authorization of that facility or its medical devices."142 As a result, FDA registrations are virtually meaningless, outside the context of the simple fact of registration with the FDA’s database. However, to the general public, these "registration" claims can lead consumers to mistakenly presume products are reliable and FDA approved. Similarly, consumers often don’t understand that an "EPA establishment number" only identifies the location where the product was produced in contrast to an "EPA registration number" which signifies that the pesticide and its claims have been reviewed and approved by EPA.143
Other federal agencies also offered pandemic-related advice to provide consumers with the important tools to help them identify the large numbers of proliferating scams. The CDC issued warnings to consumers about counterfeit masks and tips on identifying fake products.144 The EPA expressed concern about pesticide and pesticide device products that are fraudulent, counterfeit, and/or otherwise ineffective being sold online on e-commerce platforms.145 To address consumer confusion about effective COVID-19 disinfectants, particularly in a marketplace filled with new entrants making a variety of efficacy claims, the EPA created "List N." This list includes disinfectants that meet the EPA’s criteria for use against the virus that causes COVID-19.146 The EPA warned that "just because a product label states that it ‘kills 99.9% of viruses,’ this does not necessarily mean that it will be effective against the coronavirus."147 It is easy to understand how claims concerning the effectiveness of COVID-19 disinfectants can mislead consumers who are unfamiliar with these distinctions.
Similarly, the Consumer Financial Protection Bureau ("CFPB") launched a sustained consumer education campaign on COVID-19 scams, especially those related to fraudsters’ attempts to gain access to consumers’ financial information. Examples include reminders that you do not need a social security number in order to get a COVID-19 test or vaccine148 and that no one needs to pay a fee (including for early access) or share financial or
personal information for a vaccine.149 The CFPB also warned consumers about coronavirus charity scams,150 government imposter scams,151 funeral or burial expense scams,152 student loan scams (including warnings that the CARES Act does not include a student loan forgiveness component),153unemployment benefit scams,154 and child tax credit scams.155
C. ENFORCEMENT ACTIONS AND SEIZURES
1. FEDERAL ENFORCEMENT ACTIONS
a. FEDERAL CIVIL LAW ENFORCEMENT ACTIONS
Before the passage of the COVID-19 Consumer Protection Act of 2020 ("CCPA"), the FTC pursued actions under Section 5 of the FTC Act. In April 2020, the FTC filed an administrative action against Marc Ching, who was doing business as Whole Leaf Organics, for his sale of a product he claimed could treat COVID-19 as well as other products he claimed could treat cancer.156 The FTC pursued this action after defendants failed to comply with a request, which was made in a November 2019 FDA warning letter, that defendants stop suggesting that their products could be used in the mitigation, treatment, or prevention of diseases from their website.157 Defendants stipulated to a preliminary injunction in federal district court. An administrative order subsequently was issued prohibiting defendants from making prohibited statements and requiring corrective notices to prior purchasers.158
The FTC agreed to settle a case with the medical director of California-based Golden Sunrise Nutraceutical, Inc. based on charges that he took part in deceptively advertising a $23,000 treatment plan as a scientifically proven way to treat COVID-19. This included claims that he was "uniquely qualified to treat and modify the course of the Coronavirus epidemic in CHINA and other countries," and that users could expect the "disappearance of viral symptoms within two to four days."159 The defendant will be barred from making similar unsupported health claims in the future and will pay $103,420 to provide refunds to defrauded consumers.160
The Federal Trade Commission also took actions pursuant to the new authority it was granted under the CCPA.161 The CCPA specifically made it unlawful under Section 5 of the FTC Act to engage in any deceptive act or practice associated with the treatment, cure, prevention, mitigation, or diagnosis of COVID-19 or a benefit related to COVID-19. The law provides that "a violation shall be treated as a violation of a rule defining an unfair or deceptive act or practice prescribed under Sec. 18(a)(1)(B) of the FTC Act."162 The Commission can seek emergency injunctions, asset freezes, and civil penalties of up to $46,517 for each violation of the CCPA.163
The FTC has utilized the CCPA to address COVID-19 claims. It recently filed a lawsuit under the CCPA alleging that a company falsely claimed that its nasal sprays are "an effective solution to the pandemic" that provides four-hours of protection against coronavirus.164 Additionally, a chiropractor and his company who allegedly claimed their vitamin D and zinc supplements were scientifically proven to treat or prevent COVID-19, and that they were equally or more effective than vaccines, were also sued using the CCPA.165 Additionally, the Commission used the CCPA to pursue a case against a marketer who allegedly failed to deliver PPE within promised timeframes and falsely claimed consumers would get certified N95 respirators but instead provided inferior cloth masks.166
ii. SECURITIES AND EXCHANGE COMMISSION
In contrast to the FTC, the Securities and Exchange Commission’s ("SEC") mission is investor-focused; it seeks to support the fairness of the securities market, not necessarily the marketplace for consumer goods and services. But in the context of responding to a rapidly evolving pandemic, the SEC has also played a significant role.
There are multiple, often related, types of securities fraud that have been seen during the pandemic. First, a fraud of sufficient scale will require some capital formation. Fraudsters often need capital to facilitate orders to attempt to import unauthorized or un-approved test kits, for example. Offerings or sales of securities can be an efficient way to raise that capital, especially in the earliest days of a pandemic when information on what test kits or treatments are FDA-approved is uncertain. A second form of pandemic-related securities fraud is more prosaic—pump-and-dump schemes, especially involving penny stocks. If a company looks like it might have an early "cure" or "treatment," it becomes a company that has the potential to secure massive market share for a very desired product. The SEC has launched enforcement actions on both of these types of COVID-19 fraud, and all of these enforcement actions have also helped protect consumers and public health.
During the pandemic, the SEC initiated a number of enforcement actions arising from companies allegedly making false statements to investors and the market about their purported development of products and services relating to COVID-19. In May 2020, the SEC filed actions against Applied BioSciences and Turbo Global Partners. In the Applied BioSciences case, the SEC alleged that the company made false statements claiming it had developed "home" COVID-19 tests when none had yet been approved for distribution by the FDA.167 And in its enforcement action against Turbo Global Partners, the SEC brought a claim for violations of Section 10(b) of the Securities and Exchange Act after the company allegedly falsely claimed it had entered into a large multi-national public-private partnership to sell thermal scanning equipment to detect people with fevers.168 In February 2021, the SEC filed an action against Arrayit Corporation and its CEO for allegedly making false statements in March and April 2020 that the company had developed a blood test to diagnose COVID-19, when in reality it had not even purchased the necessary materials.169
b. FEDERAL CRIMINAL LAW ENFORCEMENT ACTIONS
In addition to civil enforcement actions, the federal government also brought criminal charges against individuals engaged in COVID-19-related deceptive practices. The United States Attorney for the Central District of California brought the first COVID-19 criminal prosecution in March 2020, charging a small-time actor with attempted wire fraud after he falsely claimed on a viral video that he invented the cure for COVID-19 and sought seven-figure investments for his injections and pills.170 In another criminal fraud case from the early pandemic, the United States Attorney for the District of Columbia charged the CEO of Decision Diagnostics Corp. with securities fraud after he allegedly defrauded investors "by making false and misleading statements about the purported development of a new COVID-19 test, leading to millions of dollars in investor losses."171 The government alleged the company falsely claimed it developed a 15-second test to detect COVID-19 from a finger prick sample of blood and was on the verge of receiving FDA approval, leading the company’s stock to jump by more than 1,500 percent within a month.172 In truth, the test allegedly was not a validated method of accurately detecting COVID-19, much less an actual product ready for manufacture and sale.
c. FEDERAL SEIZURES
Throughout the pandemic, United States Customs and Border Patrol Agency ("CBP") seized unlawful COVID-19-related products that were being shipped into the United States.173 In one case CBP seized 28,800 of what it described as "[a] Chinese medication, falsely advertising to treat COVID-19."174 In another case in Seattle, CPB seized "eight shipments of unauthorized influenza treatments being marketed to treat COVID-19."175
2. STATE AND LOCAL ENFORCEMENT ACTIONS
State and local law enforcement agencies also played an important role in protecting the public from and shutting down COVID-19 scams.
In California, state and local agencies used the UCL and FAL to great effect to quickly halt consumer COVID-19 scams in their infancies. In a little over two months after the state of emergency was first declared in California, the Los Angeles City Attorney’s Office shut down four different companies allegedly selling unauthorized and falsely advertised "at-home" COVID-19 test kits by bringing enforcement actions under the UCL and FAL.176 These actions also alleged predicate violations of California’s Sherman Food, Drug, and Cosmetic Law for the unlawful sale and false advertisement of unapproved medical devices.177 The office obtained judgments for permanent injunctions prohibiting future sales, full restitution, and more than $4 million in civil penalties.178
The Consumer and Workplace Protection Unit of the Los Angeles City Attorney’s Office also brought actions to fight price gouging, the sale of false cures, and the advertisement of unregistered disinfectant pesticide claiming to "kill" the novel coronavirus for at least 28 days after application. The office brought a UCL and FAL action against a company, KNature, selling $100 jars of radish paste that it allegedly claimed could treat COVID-19.179 The office was able to obtain a temporary restraining order halting the advertisements under the UCL’s more deferential standard for law enforcement seeking preliminary equitable relief,180 which induced an early resolution for full restitution, an injunction, and penalties. And in People v. Wellness Matrix Group, Inc., the office obtained a judgment for restitution, injunctive relief, and millions in civil penalties against a company that allegedly sold unapproved FDA test kits and unregistered disinfectant pesticide in violation of the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA").181 The company is alleged to have falsely claimed its product was an "EPA approved" disinfectant guaranteed to "kill corona on contact" for "28 days or more" after application and provided an allegedly false white paper the company said supported those claims.182 The office also successfully prosecuted eight COVID-19 criminal price gouging cases, including some of the first cases in the nation brought against online retailers for price gouging.
California’s Attorney General also brought a case under the UCL pertaining to workplace protection concerns in the pandemic. In November 2021, the California Attorney General filed a UCL case against Amazon related to its COVID-19 notification practices alleging that its COVID-19 notifications to employees and to the employers of subcontracted employees, and reports to local health agencies, did not fully satisfy the requirements of the California Labor Code and constituted unfair competition.183 Ultimately, the case was settled with Amazon being ordered to update its COVID-19 notification polices, take action to protect workers, pay $500,000 to be used for the enforcement of consumer protection laws, issue notices to workers within one day that identify the exact number of new COVID-19 cases in their workplace, inform workers of disinfection and safety plans and COVID-19-related rights, notify health care agencies of COVID-19 cases within 48 hours, and submit to monitoring by the California Attorney General.184
The UCL and FAL are such flexible and powerful tools for combatting COVID-19 fraud that federal agencies frequently referred cases to California state and local agencies for litigation. For instance, as part of its broader focus on healthcare fraud, the Department of Defense’s Defense Criminal Investigative Service ("DCIS") investigated Applied BioSciences for allegedly advertising fake COVID-19 home tests. After working up the case, DCIS referred it to the Los Angeles District Attorney and Los Angeles City Attorney for prosecution and enforcement, as the UCL provided the opportunity for an effective and speedy end to the unlawful conduct. The local prosecutors filed a civil law enforcement action in just weeks and the action settled for a permanent injunction, full restitution, and penalties doubling the company’s sales revenue from the unlawful tests185—just one example of how the UCL encouraged cross-jurisdictional collaboration between state, local, and federal agencies.
Consumer protection prosecutors in other states used their UDAPs to halt and curb deceptive and unlawful COVID-19 business practices in their jurisdictions. The Attorney Generals of Arkansas and Missouri, for instance, brought civil law enforcement actions against televangelist James Bakker for falsely advertising and unlawfully selling colloidal silver as a cure for COVID-19.186 Both obtained settlements—after Bakker unsuccessfully sought to have all investigations into his misconduct enjoined as purported violations of the First Amendment’s Establishment and Free Exercise Clauses187—for permanent injunctions and full restitution to consumers.188 And the Minnesota Attorney General sued the Center for COVID Control, a company operating hundreds of COVID-19 testing storefronts nationwide, for violations of Minnesota’s Consumer Fraud, False Advertising, and UDAP statutes for falsely guaranteeing fast test results and creating false and inaccurate result reports.189 The litigation is ongoing, but as a result of the filing of the lawsuit, the Center for COVID Control suspended operations nationwide.190
V. PROPOSALS TO IMPROVE LEGAL OPTIONS TO PROTECT CONSUMERS IN FUTURE LONG-TERM STATES OF EMERGENCY
Evaluating the challenges that law enforcement agencies have faced during this unprecedented pandemic is critical in determining the legislative changes that are necessary to create more robust consumer protections. Requiring the legislature to restore the FTC’s ability to obtain monetary relief pursuant to Section 13(b) of the FTC Act, which it lost following the Supreme Court’s decision in AMG Capital Management,191 is one of the most critical and urgently needed changes.192 As of January 28, 2022, the FTC had received more than 292,000 COVID-19-related fraud reports, reflecting $674 million in fraud losses.193 Restoring the FTC’s ability to provide redress to wronged consumers through its 13(b) authority, which has been a fundamental part of its consumer protection mission, is critical.194 Here, where the financial losses are so significant, true relief for victims of COVID-19 scams can only come with the restored ability to obtain nationwide redress.
Although the CCPA eventually was passed to provide the FTC with additional tools to address pandemic-related issues, it’s important that the FTC be able to move swiftly to provide redress in cases that may not fit within the parameters of that new law. The FTC’s broad authority to obtain consumer redress should be reinstated.
State price gouging laws should be reformed to better respond to longer-term emergencies like pandemics or environmental disasters. The current laws, like California Penal Code Section 396, are designed for what are hopefully shorter-term emergencies—earthquakes, wildfires, and the like. They do not take into account the fact that price gouging may occur months or years after the initial declaration of emergency or that the products being gouged may not even have existed when the disaster started. A hybrid model combining elements of Penal Code Section 396 and the Defense Production Act could strike an appropriate balance. Like in Section 396, price gouging of all consumer goods would be prohibited for the first 30 days following the declaration of emergency, but going forward until the expiration of the declaration, a product must be designated under the Defense Production Act in order to be subject to the anti-price gouging law. This approach provides broad, short-term protection for consumers at the inception of a crisis, while providing more targeted protection (if necessary) in a longer-term emergency. By tying the price gouging prohibition to a product’s designation under the Defense Production Act, the new approach limits liability only to those products directly related to the emergency and supports the broader public response to the disaster.
"Pop-up" testing centers are a new challenge that should also be addressed legislatively. Without specific laws designed to address pop-up centers, it is difficult for regulators and law enforcement to
have the necessary tools to ensure that locations are safely engaging in the testing of consumers and are not, instead, engaged in identity theft or are taking samples that are not being properly tested. New laws should be adopted to prescribe specific requirements that must be met before such facilities are allowed to operate. This could include a registration requirement with the local, state, and/or federal government that includes information about which CLIA-certified lab is being used, who the responsible parties are for the operation, what steps are being taken to ensure the safe collection of samples, and information concerning (1) what types of personal information is being collected, (2) the steps that are being taken to secure sensitive health information and other personally identifying information, and (3) where the operation will be located.
Finally, civil penalties for violations of California’s UCL and FAL could be increased to reflect the harm that can be caused by these types of schemes when they are perpetrated during a state of emergency. The current maximum penalty of $2,500 per violation is a far cry from the recently passed CCPA penalty amount of $46,517, and even a simple, conversative inflation estimate suggests that a maximum penalty of $10,000 today would still be worth less than $2,500 was in 1977, the year the penalty was enacted by the California Legislature.195 In order to create more consistency on the state and federal levels, and to create a deterrent, increasing civil penalties in California may be an important modification to consider.
1. The views expressed herein are solely the authors, and not necessarily the Los Angeles City Attorney’s views.
2. Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 181 (1999) ("[U]nfair or fraudulent business practices may run the gamut of human ingenuity and chicanery," so it is "impossible to draft in advance detailed plans and specifications of all acts and conduct to be prohibited.") (cleaned up).
4. CDC Museum COVID-19 Timeline, CTRS. FOR DISEASE CONTROL & PREVENTION, https://www.cdc.gov/museum/timeline/covid19.html (last visited Mar. 2, 2022); Proclamation No. 9994, 85 Fed. Reg. 15337 (Mar. 18, 2020).
7. Proclamation No. 9994, 85 Fed. Reg. 15337 (Mar. 18, 2020).
8. CDC Museum COVID-19 Timeline, supra note 4.
9. Proclamation No. 9994, 85 Fed. Reg. 15337 (Mar. 18, 2020).
10. See, e.g., Proclamation of a State of Emergency issued by the Governor of California (Mar. 4, 2020); Public Order Under City of Los Angeles Emergency Authority issued by the Mayor of Los Angeles (Mar. 15, 2020); Safer At Home Order for Control of COVID-19 issued by the Los Angeles County Board of Supervisors (Mar. 19, 2020); Cal. Exec. Order No. 33-20 (Mar. 19, 2020), available at https://www.gov.ca.gov/wp-content/uploads/2020/03/3.19.20-attested-EO-N-33-20-COVID-19-HEALTH-ORDER.pdf.
11. Public Order Under City of Los Angeles Emergency Authority issued by the Mayor of Los Angeles (Mar. 15, 2020); Safer at Home Order for Control of COVID-19 issued by the Los Angeles County Board of Supervisors (Mar. 19, 2020); Cal. Exec. Order No. 33-20 (Mar. 19, 2020), available at https://www.gov.ca.gov/wp-content/uploads/2020/03/3.19.20-attested-EO-N-33-20-COVID-19-HEALTH-ORDER.pdf.
12. Governor Mario Cuomo (@NYGovCuomo), TWITTER (Mar. 16, 2020, 7:34 AM), https://twitter.com/NYGovCuomo/status/1239560673102880776.
13. Safer at Home Order for Control of COVID-19 issued by the Los Angeles County Board of Supervisors (Mar. 19, 2020); Cal. Exec. Order No. 33-20 (Mar. 19, 2020), available at https://www.gov.ca.gov/wp-content/uploads/2020/03/3.19.20-attested-EO-N-33-20-COVID-19-HEALTH-ORDER.pdf.
14. Governor Cuomo Signs the "New York State on PAUSE" Executive Order, GOVERNOR: N.Y. STATE (Mar. 20, 2020), https://www.governor.ny.gov/news/governor-cuomo-signs-new-york-state-pause-executive-order.
15. Soumya Karlamangla & Emily Baumgaertner, Problems Mount with Coronavirus Testing, Limiting Access and Sowing Confusion, L.A. TIMES (Mar. 12, 2020), https://www.latimes.com/california/story/2020-03-11/coronavirus-testing-kits-lack-key-ingredient-causing-confusion.
16. Colleen Tressler, More FTC Warnings About Scam Coronavirus Treatments, FED. TRADE COMM’N: CONSUMER (June 4, 2020), https://www.consumer.ftc.gov/blog/2020/06/more-ftc-warnings-about-scam-coronavirus-treatments.
17. CDC Museum COVID-19 Timeline, supra note 4. On January 27, 2020, the United States Food and Drug Administration announced that it would "take ‘critical actions to advance development of novel coronavirus medical countermeasures’ with interagency partners, including CDC." On March 28, 2020, the FDA issued "an Emergency Use Authorization (EUA) to allow hydroxychloroquine sulfate and chloroquine phosphate products donated to the Strategic National Stockpile to be distributed and used for certain hospitalized patients with COVID-19."
18. Pien Huang, Aerosols, Droplets, Fomites: What We Know About Transmission of COVID-19, NPR (July 6, 2020), https://www.npr.org/sections/goatsandsoda/2020/07/06/887919633/aerosols-droplets-fomites-what-we-know-about-transmission-of-covid-19.
19. Novel Coronavirus (2019-nCoV) Situation Report 1, WORLD HEALTH ORG. (Jan. 21, 2020), https://www.who.int/docs/default-source/coronaviruse/situation-reports/20200121-sitrep-1-2019-ncov.pdf?sfvrsn=20a99c10_4; Transmission of SARS-CoV-2: Implications for Infection Prevention Precautions, WORLD HEALTH ORG. (July 9, 2021), https://www.who.int/news-room/commentaries/detail/transmission-of-sars-cov-2-implications-for-infection-prevention-precautions ("[T] ransmission may also occur indirectly through touching surfaces in the immediate environment or objects contaminated with virus from an infected person (e.g. stethoscope or thermometer), followed by touching the mouth, nose, or eyes.").
20. Taylor Telford & Abha Bhattarai, Long Lines, Low Supplies: Coronavirus Chaos Sends Shoppers Into Panic-buying Mode, WASH. POST (Mar. 2, 2020), https://www.washingtonpost.com/business/2020/03/02/grocery-stores-coronavirus-panic-buying.
21. Stopping COVID-19 Fraud and Price Gouging: Prepared Statement of the Federal Trade Commission Before the Subcomm. on Consumer Prot., Prod. Safety, & Data Sec. of the S. Comm. on Com., Sci., & Transp., 117th Cong. 1 (2022) (statement of Samuel Levine, Director of the Bureau of Consumer Protection, Federal Trade Commission) ("[W]e have encountered disturbing trends and surging complaints as Americans are being targeted by predators large and small, with schemes including get-rich-quick opportunities, bogus cures, false promises of economic assistance, and counterfeit personal protective equipment (PPE).").
22. Proclamation No. 9994, 85 Fed. Reg. 15337 (Mar. 13, 2020).
23. Policy for Coronavirus Disease-2019 Tests During the Public Health Emergency, U.S. FOOD & DRUG ADMIN., https://www.fda.gov/regulatory-information/search-fda-guidance-documents/policy-coronavirus-disease-2019-tests-during-public-health-emergency-revised (last visited Mar. 2, 2022).
24. Id. at 9.
25. Defined by the FDA as "settings such as hospitals, physician offices, urgent care, outreach clinics, pharmacies, and temporary patient care settings that have appropriately trained personnel to perform the test and are operating under a CLIA Certificate of Waiver or Certificate of Compliance." COVID-19 Test Uses: FAQs on Testing for SARS-Cov-2, U.S. FOOD & DRUG ADMIN., https://www.fda.gov/medical-devices/coronavirus-covid-19-and-medical-devices/covid-19-test-uses-faqs-testing-sars-cov-2 (last visited Mar. 2, 2022).
26. Serology tests analyze a person’s blood to determine whether they have SARS-CoV-2 antibodies. This test can inform a person that they were infected with COVID-19 at some point but is not necessarily useful in determining whether a person currently has the disease or is shedding viral load.
27. Steve Eder, Antibody Test, Seen as Key to Reopening Country, Does Not Yet Deliver, N.Y TIMES (May 7, 2020), https://www.nytimes.com/2020/04/19/us/coronavirus-antibody-tests.html.
28. Press Release, L.A. City Att’y, City Attorney Mike Feuer Secures Settlement With Company Illegally Selling At-Home Covid-19 Tests (Apr. 6, 2020), https://www.lacityattorney.org/post/city-attorney-mike-feuer-secures-settlement-with-company-illegally-selling-at-home-covid-19-tests; Compl., People v. Yikon Genomics, Inc., No. 20STCV13169 (Cal. Super. Ct. Apr. 3, 2020).
29. See generally Compl., People v. RootMD, Inc., No. 20STCV15180 (Cal. Super. Ct. Apr. 20, 2020); Press Release, L.A. City Att’y, Feuer Secures Judgment Against La-Area Covid-19 At-Home Test Distributor (Apr. 20, 2020), https://www.lacityattorney.org/post/feuer-secures-judgment-against-second-covid-19-home-testing-kit-distributor.
30. Press Release, L.A. City Att’y, Feuer and Lacey Bring Action Against L.A. Area’s Applied BioSciences Corp. Over Its Antibody Test (May 1, 2020), https://www.lacityattorney.org/post/feuer-and-lacey-bring-action-against-l-a-area-s-applied-biosciences-corp-over-its-antibody-test; Compl., People v. Applied Biosciences Corp., No. 20STCV16600 (Cal. Super. Ct. Apr. 30, 2020).
31. Compl. ¶ 89, People v. Wellness Matrix Grp. Inc., No. 20STCV19955 (Cal Super. Ct. May 26, 2020).
32. Meagan Flynn, Small-time Actor Peddled Fake Coronavirus Cure to Millions Online, Feds Charge in First COVID-19 Prosecution, WASH. POST (Mar. 26, 2020), https://www.washingtonpost.com/nation/2020/03/26/ fake-coronavirus-cure-fraud.
33. Colloidal Silver, NAT’L INST. OF HEALTH: NAT’L CTR. FOR COMPLIMENTARY AND INTEGRATIVE HEALTH (Mar. 2017), https://www.nccih.nih.gov/health/colloidal-silver; Olga Khazan, A Common Snake Oil Reemerges for the Coronavirus, THE ATLANTIC (June 22, 2020), https://www.theatlantic.com/health/archive/2020/06/does-colloidal-silver-work-covid-19/613177.
34. Colloidal Silver, supra note 33.
35. Press Release, Court Orders Halt to Sale of Silver Product Fraudulently Touted as COVID-19 Cure, U.S. Dep’t of Justice (Apr. 29, 2020), https://www.justice.gov/opa/pr/court-orders-halt-sale-silver-product-fraudulently-touted-covid-19-cure.
36. Cheryl Teh, Televangelist Jim Bakker Was Ordered to Pay $156,000 for Touting the "Silver Solution" a Fake COVID Cure That Contains a Dangerous Ingredient, YAHOO! NEWS (June 24, 2021), https://news.yahoo.com/televangelist-jim-bakker-ordered-pay-043701138.html.
37. Warning Letter from William A. Correll, Off. Compliance Dir., U.S. Food & Drug Admin., to Dr. Joseph M. Mercola, DO, Mercola.com, LLC (Feb. 18, 2021), https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/mercolacom-llc-607133-02182021; Warning Letter from Donald D. Ashley, Off. Compliance Dir., Food & Drug Admin., to SpiceTac (May 19, 2020), https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/spicetac-607144-05192020.
38. Stipulation for Final J. and Perm. Inj., People v. KNature Co. Inc., No. 20STCV18300 (Cal. Super. Ct. July 23, 2020).
39. Warning Letter from Donald D. Ashley, Off. Compliance Dir., Food & Drug Admin., to Doug Pineda, AgroTerra, Ltd. (May 7, 2020), https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/agroterra-ltd-dba-patriot-hemp-company-606086-05072020.
40. Warning Letter from William A. Correll to Dr. Joseph M. Mercola, supra note 37; Warning Letter from Donald D. Ashley to SpiceTac, supra note 37; Warning Letter from Donald D. Ashley to Doug Pineda, supra note 39.
41. See e.g., Why You Should Not Use Ivermectin to Treat or Prevent COVID-19, U.S. FOOD & DRUG ADMIN., https://www.fda.gov/consumers/consumer-updates/why-you-should-not-use-ivermectin-treat-or-prevent-covid-19 (last visited Mar. 2, 2022); Steven Chee Loon Lim, et al., Efficacy of Ivermectin Treatment on Disease Progression Among Adults With Mild to Moderate COVID-19 and Comorbidities, JAMA INTERNAL MED. (Feb. 18, 2022), https://jamanetwork.com/journals/jamainternalmedicine/article-abstract/2789362.
42. Coronavirus: LA City Attorney Files Charges Against Companies Accused of Inflating Prices for N95 Masks, ABC 7 L.A. (Apr. 7, 2020), https://abc7.com/coronavirus-price-gouging-covid19-los-angeles-scams-city-attorney/6084437.
43. People v. Zind, LLC, No. 0CH01135 (Cal. Super. Ct. Apr. 2020); People v. Km Bros., Inc., No. 0CJ01157 (Cal. Super. Ct. Apr. 2020).
44. People v. Acomes, Inc., No. 0CJ01172 (Cal. Super. Ct. Apr. 2020).
45. See Jack Nicas, He Has 17,700 Bottles of Hand Sanitizer and Nowhere to Sell Them, N.Y. TIMES (Mar. 15, 2020), https://www.nytimes.com/2020/03/14/technology/coronavirus-purell-wipes-amazon-sellers.html.
46. Nandita Bose & David Shepardson, Amazon Says Working with State AGs to Nab Sellers Engaged in Price-gouging Over Coronavirus, REUTERS (Mar. 6, 2020), https://www.reuters.com/article/us-health-coronavirus-amazon-com-idUSKBN20T2Y8.
47. COVID-19 and PCR Testing, CLEVELAND CLINIC, https://my.clevelandclinic.org/health/diagnostics/21462-covid-19-and-pcr-testing (last visited Mar. 2, 2022).
48. See, e.g., CDC Requirements for International Travel, CTRS. FOR DISEASE CONTROL & PREVENTION, https://www.cdc.gov/coronavirus/2019-ncov/travelers/testing-international-air-travelers.html (last visited Mar. 2, 2022); Testing for COVID-19: When to Get Tested and testing Results, GOV’T OF CANADA, https://www.canada.ca/en/public-health/services/diseases/2019-novel-coronavirus-infection/symptoms/testing/diagnosing.html (last visited Mar. 2, 2022).
49. See generally Compl., Minnesota v. Ctr. for COVID Control LLC, No. 27-CV-22-731 (Minn. 4th Jud. Dist. Jan. 19, 2022).
50. See supra note 47.
51. Compl. ¶¶ 38-46, Minnesota v. Ctr. for COVID Control LLC, supra note 49.
52. Michelle Andrews, Officials Struggle to Regulate Pop-Up Covid Testing Sites—and Warn Patients to Beware, KAISER HEALTH NEWS (Jan. 18, 2022), https://khn.org/news/article/officials-struggle-to-regulate-pop-up-covid-testing-sites-and-warn-patients-to-beware.
53. Id.; CBS2 Investigation Finds Dozens of Unregulated COVID Testing Sites Popping Up, CBS 2 L.A. (Jan. 13, 2022), https://losangeles.cbslocal.com/2022/01/13/cbs-2-investigation-finds-dozens-of-unregulated-covid-testing-sites-popping-up.
56. See e.g., L.A. MUN. CODE § 42.00(b).
57. CAL. BUS. & PROF. CODE § 17200.
58. Hewlett v. Squaw Valley Ski Corp., 54 Cal. App. 4th 499, 520 (1997).
59. Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999) (citations and internal quotation marks omitted).
60. CAL. BUS. & PROF. CODE § 17200.
61. Cel-Tech Commc’ns, Inc., 20 Cal. 4th at 180.
63. Saunders v. Superior Ct., 27 Cal. App. 4th 832, 839 (1994).
64. State Farm Fire & Cas. Co. v. Super. Ct., 45 Cal. App. 4th 1093, 1103 (1996).
65. Schnall v. Hertz Corp., 78 Cal. App. 4th 1144, 1167 (2000).
67. Cel-Tech Commc’ns, Inc., 20 Cal. 4th at 187.
68. Id. at 181 (citing Am. Philatelic Soc’y v. Claibourne, 3 Cal. 2d 689, 698 (1935) ("The unfair competition law has a broader scope for a reason. The Legislature intended by this sweeping language to permit tribunals to enjoin on-going wrongful business conduct in whatever context such activity might occur. Indeed, the section was intentionally framed in its broad, sweeping language, precisely to enable judicial tribunals to deal with the innumerable new schemes which the fertility of man’s invention would contrive." (cleaned up))).
69. See People v. Conway, 42 Cal. App. 3d 875, 885 (1974) (company president "was in a position to control the activities" of corporation and "thus could be held  liable" for his employees’ violations of the law); see also People v. Toomey, 157 Cal. App. 3d 1, 15 (1984) ("[I]t is settled that a managing officer of a corporation with control over the operation of the business is personally responsible for acts of subordinates done in the normal course of business.").
70. See People v. Roscoe, 169 Cal. App. 4th 829, 831-32 (2008); Statement of Decision, People v. WBI LLC, No. CV17-1989 (Cal. Super. Ct. May 10, 2021).
71. CAL. BUS. & PROF. CODE § 17500.
72. See Chern v. Bank of Am., 15 Cal. 3d 866, 876 (1976); People v. Super. Ct., 96 Cal. App. 3d 181, 190 (1979).
73. People v. Super. Ct., 9 Cal. 3d 283, 289 (1973); Prata v. Super. Ct., 91 Cal. App. 4th 1132, 1145 (2001).
74. Chern, 15 Cal. 3d at 876.
75. Fletcher v. Sec. Pac. Nat’l Bank, 23 Cal. 3d 442, 451 (1979).
76. People v. Overstock.com, Inc., 12 Cal. App. 5th 1064, 1078 (2017).
77. Day v. AT&T Corp., 63 Cal. App. 4th 325, 332-33 (1998); see also People v. Toomey, 157 Cal. App. 3d 1, 17 (1984) ("[F]ailure to disclose conditions and limitations on the use of the coupons misrepresented the nature and value of the product and therefore in itself constituted ‘unfair competition’ and ‘false or misleading statements’ under sections 17200 and 17500.").
78. Brockey v. Moore, 107 Cal. App. 4th 86 (2003); Colgan v. Leatherman Tool Grp., Inc., 135 Cal. App. 4th 663 (2006).
79. See e.g., People v. Conway, 42 Cal. App. 3d 875, 885 (1974); Toomey, 157 Cal. App. 3d at 15 (individual officers liable for false advertising conducted by subordinate employees under "control" theory).
80. 15 U.S.C. § 45(a)(1).
81. Fed. Trade Comm’n v. Pantron I Corp., 33 F.3d 1088, 1095 (9th Cir. 1994) (adopting standard in Cliffdale Assocs., Inc., 103 F.T.C. 110, 164-65 (1984)); accord Fed. Trade Comm’n v. LoanPointe, LLC, 525 F. App’x 696 (10th Cir. 2013); Fed. Trade Comm’n v. Stefanchik, 559 F.3d 924, 928 (9th Cir. 2009).
82. Fed. Trade Comm’n v. John Beck Amazing Profits, LLC, 865 F. Supp. 2d 1052, 1067 (C.D. Cal. 2012) (citing Fed. Trade. Comm’n v. U.S. Sales Corp., 785 F. Supp. 737, 748 (N.D. Ill. 1992)).
83. See Fed. Trade Comm’n v. Cyberspace.com LLC, 453 F.3d 1196, 1201 (9th Cir. 2006).
84. In re Thompson Med. Co., Inc., 104 F.T.C. 648 (1984), aff’d sub nom. Thompson Med. Co. v. Fed. Trade Comm’n, 791 F.2d 189, 197 (D.C. Cir. 1986).
85. See Pantron I Corp., 33 F.3d at 1095-96.
86. Cyberspace.com LLC, 453 F.3d at 1200 ("A solicitation may be likely to mislead by virtue of the net impression it creates even though the solicitation also contains truthful disclosures."); Stefanchik, 559 F.3d at 928 ("Deception may be found based on the ‘net impression’ created by a representation.").
87. Fed. Trade Comm’n v. Publ’g Clearing House, Inc., 104 F.3d 1168, 1171 (9th Cir. 1997); accord Removatron Int’l Corp. v. Fed. Trade Comm’n, 884 F.2d 1489, 1495 (1st Cir. 1989); Fed. Trade Comm’n v. World Travel Vacation Brokers, 861 F.2d 1020, 1029 (7th Cir. 1988).
88. Fed. Trade Comm’n v. Direct Mktg. Concepts, Inc., 624 F.3d 1, 12 (1st Cir. 2010).
89. Resort Car Rental Sys., Inc. v. Fed. Trade Comm’n, 518 F.2d 962, 964 (9th Cir. 1975).
90. Fed. Trade Comm’n v. City West Advantage, Inc., No. 2:08-cv-00609-BES-GWF, 2008 WL 2844696, at *2 (D. Nev. July 22, 2008).
91. Donaldson v. Read Magazine, Inc., 333 U.S. 178, 188 (1948).
92. Sterling Drug, Inc. v. Fed Trade Comm’n, 741 F.2d 1146, 1154 (9th Cir. 1984); see In re Thompson Med. Co., 104 F.T.C. 648, 818 (1984) (stating that to make a case that advertising is deceptive, the FTC has the burden of showing that the material claims communicated to reasonable consumers by the advertising are false in some manner).
93. Fed. Trade Comm’n v. OMICS Grp. Inc., 374 F. Supp. 3d 994, 1010 (D. Nev. 2019); Fed. Trade Comm’n v. Figgie Int’l, Inc., 994 F.2d 595, 605 (9th Cir. 1993).
94. In re Sanctuary Belize Litig., 482 F. Supp. 3d 373, 434 (D. Md. 2020) (requiring such proof "’would thwart the effective prosecutions of large consumer redress actions and frustrate the statutory goals of the’ FTC Act" (quoting Figgie Int’l, Inc., 994 F.2d at 605)).
95. Figgie Int’l, Inc., 994 F.2d at 606.
96. See Fed. Trade Comm’n v. Direct Mktg. Concepts, Inc., 624 F.3d 1, 8 (1st Cir. 2010).
98. Fed. Trade Comm’n v. John Beck Amazing Profits, LLC, 865 F. Supp. 2d 1052, 1067 (C.D. Cal. 2012) (quoting Fed. Trade Comm’n v. QT, Inc., 448 F. Supp. 2d 908, 959 (N.D. Ill. 2006)).
100. Fed. Trade Comm’n v. Pantron I Corp., 33 F.3d 1088, 1096 (9th Cir. 1994).
101. Cal. Bus. & Prof. Code § 17203 (authorizing courts "to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition").
102. 15 U.S.C. § 53.
103. Fed. Trade Comm’n v. Com. Planet, Inc., 815 F.3d 593, 598 (9th Cir. 2016); see also Fed. Trade Comm’n v. Ross, 743 F.3d 886, 890-92 (4th Cir. 2014); Fed. Trade Comm’n v. Gem Merch. Corp., 87 F.3d 466, 468-70 (11th Cir. 1996); Fed. Trade Comm’n v. Sec. Rare Coin & Bullion Corp., 931 F.2d 1312, 1314-15 (8th Cir. 1991); Fed. Trade Comm’n v. Amy Travel Serv., Inc., 875 F.2d 564, 571-72 (7th Cir. 1989).
104. AMG Capital Mgmt., LLC v. Fed. Trade Comm’n, 141 S. Ct. 1341, 1349 (2021).
106. Id. at 1348-49.
107. Id. at 1349.
109. CAL. PENAL CODE § 396.
110. Id. § 396(b).
111. Id. § 396(e).
112. L.A. MUN. CODE § 47.12(d) (2020).
113. CAL. PENAL CODE § 396(b) ("If the person, contractor, business, or other entity did not charge a price for the goods or services immediately prior to the proclamation or declaration of emergency, it may not charge a price that is more than 50 percent greater than the cost thereof to the vendor as ‘cost’ is defined in Section 17026 of the Business and Professions Code.").
114. Section 8665 provides that "[a]ny person who violates any of the provisions of this chapter or who refuses or willfully neglects to obey any lawful order or regulation promulgated or issued as provided in this chapter, shall be guilty of a misdemeanor and, upon conviction thereof, shall be punishable by a fine of not to exceed one thousand dollars ($1,000) or by imprisonment for not to exceed six months or by both such fine and imprisonment." CAL. GOV’T CODE § 8665.
115. Cal. Exec. Order No. 2-22 (Jan. 8, 2022), available at https://www.gov.ca.gov/wp-content/uploads/2022/01/1.8.22-EO-N-2-22-Price-Gouging-Test-Kits.pdf.
116. CAL. PENAL CODE § 396(e).
117. 50 U.S.C. § 4512.
118. Exec. Order No. 13,910, Preventing Hoarding of Health and Medical Resources to Respond to the Spread of COVID-19, 85 Fed. Reg. 17,001 (Mar. 23, 2020).
119. Compare State Farm Fire & Cas. Co. v. Super. Ct., 45 Cal. App. 4th 1093, 1103 (1996), with 50 U.S.C. § 4512.
120. FTC Coronavirus Warning Letters to Companies, FED. TRADE COMM’N, https://www.ftc.gov/coronavirus/enforcement/warning-letters (last visited Mar. 2, 2022).
121. Id.; Press Release, Fed. Trade Comm’n, FTC Sends Letters Warning 50 More Marketers to Stop Making Unsupported Claims That Their Products and Therapies Can Effectively Prevent or Treat COVID-19, https://www.ftc.gov/news-events/press-releases/2020/05/ftc-sends-letters-warning-50-more-marketers-stop-making.
122. Press Release, Fed. Trade Comm’n, FTC Warns Nine VoIP Service Providers and Other Companies Against "Assisting and Facilitating" Illegal Coronavirus-Related Telemarketing Calls, (Mar. 27, 2020), https://www.ftc.gov/news-events/press-releases/2020/03/ftc-warns-nine-voip-service-providers-other-companies-against; Press Release, Fed. Trade Comm’n, FTC and FCC Send Joint Letters to Additional VoIP Providers Warning Against "Routing and Transmitting" Illegal Coronavirus-Related Robocalls (May 20, 2020), https://www.ftc.gov/news-events/press-releases/2020/05/ftc-fcc-send-joint-letters-additional-voip-providers-warning
123. Press Release, Fed. Trade Comm’n, FTC Sends Letters Warning 50 More Marketers to Stop Making Unsupported Claims That Their Products and Therapies Can Effectively Prevent or Treat COVID-19 (May 21, 2020), https://www.ftc.gov/news-events/press-releases/2020/05/ftc-sends-letters-warning-50-more-marketers-stop-making.
124. FTC Coronavirus Warning Letters to Companies, supra note 120.
126. Pandemic: The FTC in Action, FED TRADE COMM’N, https://www.ftc.gov/coronavirus (last visited Mar. 5. 2022) (summarizing the FTC’s enforcement efforts and including links to articles about specific actions); see, e.g., Press Release, Fed. Trade Comm’n, FTC Sues PPE Marketer for Falsely Promising Quick Delivery of N95 Facemasks (June 30, 2021), https://www.ftc.gov/news-events/press-releases/2021/06/ftc-sues-ppe-marketer-falsely-promising-quick-delivery-n95; Press Release, Fed Trade Comm’n, FTC Sues California Marketer of $23,000 COVID-19 "Treatment" Plan (July 31, 2020), https://www.ftc.gov/news-events/press-releases/2020/07/ftc-sues-california-marketer-23000-covid-19-treatment-plan; see also infra Sections IV.A.2, IV.C.1.a.i.
127. U.S. FOOD & DRUG ADMIN., FDA COVID-19 RESPONSE 1 (2021), https://www.fda.gov/media/137005/download.
129. Warning Letter from Donna Engleman, Div. Mkt. Intel. Dir., U.S. Food & Drug Admin., to Databazaar.com (Sept. 3, 2021), https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/databazaarcom-617199-09032021; Warning Letter from Donna Engleman, Div. Mkt. Intel. Dir., Food & Drug Admin., to Manhattan Stitching Co. (Apr. 13, 2021), https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/manhattan-stitching-company-inc-611719-04132021.
130. Warning Letter from Timothy T. Stenzel, Off. In Vitro Diagnostics & Radiological Health Dir., Food & Drug Admin., to Rich Butler, Managing Dir., DermaCare Biosciences, Ltd. (Dec. 1, 2021), https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/dermacare-biosciences-ltd-617910-12012021; Warning Letter from Timothy T. Stenzel, Off. In Vitro Diagnostics & Radiological Health Dir., Food & Drug Admin., to Chris Ormiston, USH Diagnostics, Inc./Covidinstanttest.net (July 9, 2021), https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/ush-diagnostics-inccovidinstanttestnet-612084-07092021.
131. Warning Letter Donald D. Ashley, Off. Compliance Dir., Food & Drug Admin., to Michael Reiber, Prefense LLC (Apr. 23, 2020), https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/prefense-llc-605488-04232020; Warning Letter from Donald D. Ashley, Off. Compliance Dir., Food & Drug Admin., to Despo Caldwell, CEO, Disinfect & Shield (May 6, 2021), https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/disinfect-shield-613716-05062021.
132. See id.
133. Warning Letter from Donald D. Ashley, Off. Compliance Dir., Food & Drug Admin., to Robert Cefail, President, Quadrant Sales & Mktg., Inc. (May 28, 2020), https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/quadrant-sales-marketing-inc-607625-05282020.
135. Id.; Warning Letter from Donald D. Ashley to Despo Caldwell, supra note 131.
136. 15 U.S.C. §§ 41-58.
137. Warning Letter from Donald D. Ashley, Off. Compliance Dir., Food & Drug Admin., to Corona-cure.com (Mar. 26, 2020), https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/corona-curecom-605875-03262020.
139. FDA COVID-19 Response, supra note 127, at 4.
140. FDA Updates on Hand Sanitizers Consumers Should Not Use, U.S. FOOD & DRUG ADMIN., https://www.fda.gov/drugs/drug-safety-and-availability/fda-updates-hand-sanitizers-consumers-should-not-use#products (last visited Mar. 2, 2022).
142. Are There "FDA Registered" or "FDA Certified" Medical Devices? How Do I Know What Is FDA Approved?, U.S. FOOD & DRUG ADMIN., https://www.fda.gov/medical-devices/consumers-medical-devices/are-there-fda-registered-or-fda-certified-medical-devices-how-do-i-know-what-fda-approved (last visited Jan. 30, 2022) (emphasis added).
143. ENV’T PROT. AGENCY, WHAT YOU NEED TO KNOW REGARDING PRODUCTS MAKING CLAIMS TO KILL THE CORONAVIRUS CAUSING COVID-19 (Jan. 2021), https://www.epa.gov/sites/default/files/2020-05/documents/cornavirus-compliance-advisory.pdf.
144. Counterfeit Respirators/Misrepresentation of NIOSH-Approval, CTRS. FOR DISEASE CONTROL & PREVENTION, https://www.cdc.gov/niosh/npptl/usernotices/counterfeitResp.html (last visited Mar. 2, 2022).
145. ENV’T PROT. AGENCY, supra note 143, at 3.
146. About List N: Disinfectants for Coronavirus (COVID-19), ENV’T PROT. AGENCY, https://www.epa.gov/coronavirus/about-list-n-disinfectants-coronavirus-covid-19-0 (last visited Mar. 2, 2022).
147. ENV’T PROT. AGENCY, supra note 143, at 2.
148. Resources to Help You Avoid Scams, CONSUMER FIN. PROT. BUR., https://www.consumerfinance.gov/coronavirus/avoiding-scams (last visited Mar. 2, 2022).
156. Compl. at 5, In re Marc Ching, No. 9394 (F.T.C. July 8, 2020), available at https://www.ftc.gov/system/files/documents/cases/d09394_administrative_part_iii_complaint.pdf.
157. Id. at 4.
158. Decision and Order at 6, 11-12, Ching, No. 9394 (F.T.C. Oct. 16, 2020) available at https://www.ftc.gov/system/files/documents/cases/d09394_whole_leaf_decision_and_order.pdf; Press Release, Fed. Trade Comm’n, "Thrive" Supplement Marketer Agrees to Preliminary Order Barring Him From Claiming It Can Treat, Prevent, or Reduce the Risks Associated With COVID-19 (Apr. 28, 2020), https://www.ftc.gov/news-events/press-releases/2020/04/thrive-supplement-marketer-agrees-preliminary-order-barring-him.
159. Press Release, Fed. Trade Comm’n, Promoter of $23,000 COVID-19 "Treatment" Plan Barred from Making Bogus Health Claims (June 14, 2021), https://www.ftc.gov/news-events/press-releases/2021/06/promoter-23000-covid-19-treatment-plan-barred-making-bogus-health (quoting Compl. at 11-12, Fed. Trade Comm’n v. Golden Sunrise Nutraceutical, Inc., No. 1:20-at-00540 (E.D. Cal. July 30, 2020)).
160. Press Release, supra note 159.
161. COVID-19 Consumer Protection Act (CCPA), Pub. L. No. 116-260, 134 Stat. 1182, § 1401 (2020); see Stopping COVID-19 Fraud and Price Gouging, supra note 21, at 3.
162. COVID-19 Consumer Protection Act of the 2021 Consolidated Appropriations Act, FED. TRADE COMM’N, https://www.ftc.gov/enforcement/statutes/covid-19-consumer-protection-act-2021-consolidated-appropriations-act (last visited Mar. 2, 2022).
163. Stopping COVID-19 Fraud and Price Gouging, supra note 21, at 3.
164. Compl. at 2, 7, 12, 14, United States. v. Xlear, Inc., No. 2:21-cv-00640-RJS (D. Utah Oct. 8, 2021).
165. Compl. at 2-3, 15, 20-22, United States v. Nepute, No. 4:21-cv-00437 (E.D. Mo. Apr. 15, 2021).
166. Compl. at 17, 34-36, Fed. Trade Comm’n v. Romero, No. 5:21-cv-00343 (M.D. Fla. June 29, 2021).
167. Compl. at 2, Sec. & Exch. Comm’n v. Applied BioSciences Corp., No. 1:20-cv-03729 (S.D.N.Y. May 14, 2020).
168. Compl. at 2, 5-8, 10-11, Sec. & Exch. Comm’n v. Turbo Glob. Partners, Inc., No. 8:20-cv-01120 (M.D. Fla. May 14, 2020).
169. Compl. at 1-2, 9-12, Sec. & Exch. Comm’n v. Arrayit Corp., No. 5:21-cv-01053 (N.D. Cal. Feb. 11, 2021).
170. Press Release, U.S. Atty’s Off., Cent. Dist. of Cal., U.S. Dep’t of Justice, 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-fraudulent-investment-scheme-featuring.
171. Indictment at 15, United States v. Berman, No. 1:20-cr-00278-TNM (D.D.C. Dec. 15, 2020); Press Release, Crim. Fraud Section, U.S. Dep’t of Justice, CEO of Medical Device Company Charged in COVID-19 Related Securities Fraud Scheme (Dec. 18, 2020), https://www.justice.gov/opa/pr/ceo-medical-device-company-charged-covid-19-related-securities-fraud-scheme.
172. Indictment at 6-10, Berman, No. 1:20-cr-00278-TNM; Press Release, supra note 171.
173. See, e.g., Press Release, U.S. Customs & Border Prot., U.S. Dep’t of Homeland Sec., CBP Seizes Unauthorized COVID-19 Medication at Port of Seattle (Aug. 17, 2020), https://www.cbp.gov/newsroom/local-media-release/cbp-seizes-unauthorized-covid-19-medication-port-seattle-0; Press Release, U.S. Customs & Border Prot., U.S. Dep’t of Homeland Sec., CBP Officers in Chicago Seize 28,800 Prohibited Capsules (May 26, 2020), https://www.cbp.gov/newsroom/local-media-release/cbp-officers-chicago-seize-28800-prohibited-capsules.
174. Press Release, CBP Officers in Chicago Seize 28,800 Prohibited Capsules, supra note 173.
175. Press Release, CBP Seizes Unauthorized COVID-19 Medication at Port of Seattle, supra note 173.
176. People v. Wellness Matrix Grp., Inc., No. 20STCV19955 (Cal. Super. Ct. May 26, 2020) (company alleged to have falsely advertised and sold at-home COVID-19 tests and disinfectant, court entered judgment for a permanent injunction, restitution, and $2 million in civil penalties); People v. RootMD, Inc., No. 20STCV15180 (Cal. Super. Ct. Apr. 21, 2020) (company alleged to have falsely advertised and sold an at-home COVID-19 tests not approved by the FDA; stipulated judgment for a permanent injunction, $147,000 in restitution, and $5,000 in civil penalties); People v. Yikon Genomics, Inc., No. 20STCV13169 (Cal. Super. Ct. Apr. 3, 2020) (company alleged to have falsely advertised and sold an at-home COVID-19 tests not approved by the FDA; stipulated judgment for a permanent injunction, $47,000 in restitution); People v. Applied BioSciences Corp., No. 20STCV16600 (Cal. Super. Ct. Apr. 30, 2020) (company alleged to have falsely advertised and sold an at-home COVID-19 tests not approved by the FDA; stipulated judgment for a permanent injunction, approximately $24,000 in refunds to consumers, and $50,000 in civil penalties).
177. CAL. HEALTH & SAFETY CODE §§ 111550, 110390, 110395.
178. Wellness Matrix Grp., Inc., No. 20STCV19955; RootMD, Inc., No. 20STCV15180; Yikon Genomics, Inc., No. 20STCV13169; Applied BioSciences Corp., No. 20STCV16600
179. Press Release, L.A. City Att’y, Radish Paste Not a COVID Cure; Feuer Settles Over Fraudulent Remedy (July 27, 2020), https://www.lacityattorney.org/post/radish-paste-not-a-covid-cure-feuer-settles-over-fraudulent-remedy.
180. IT Corp. v. Cty. of Imperial, 35 Cal. 3d 63, 69-70 (1983) (holding that in a public enforcement action brought pursuant to a law in which the People may obtain injunctive relief, harm to the public is presumed).
181. Final J. and Perm. Inj., Wellness Matrix Grp., Inc., No. 20STCV19955 (Cal. Super. Ct. Oct. 7, 2021).
182. Compl. at 30-31, Wellness Matrix Grp., Inc., No. 20STCV19955; Press Release, L.A. City Att’y, Feuer Sues Wellness Matrix Group Over Alleged Covid-19 Consumer Scams (May 27, 2020), https://www.lacityattorney.org/post/feuer-sues-wellness-matrix-group-over-alleged-covid-19-consumer-scams.
183. Compl. at 2, People v. Amazon.com Servs. LLC, No. 34-2021-00311063 (Cal. Super. Ct. Nov. 15, 2021).
184. Press Release, Cal. Att’y Gen., In Nationwide First, Attorney General Bonta Secures Judgment Requiring Amazon to Comply with "Right-to-Know" Law to Help Protect Workers Against COVID-19 (Nov. 15, 2021), https://oag.ca.gov/news/press-releases/nationwide-first-attorney-general-bonta-secures-judgment-requiring-amazon-comply.
185. Final J and Perm. Inj., Applied BioSciences Corp., No. 20STCV16600 (Cal. Super. Ct. Jan. 21, 2021).
186. Press Release, Mo. Att’y Gen., Missouri Attorney General Recoups $156,000 in Restitution, Settles Case Against Jim Bakker and Morningside Church (June 23, 2021), https://ago.mo.gov/home/news/2021/06/23/missouri-attorney-general-recoups-$156-000-in-restitution-settles-case-against-jim-bakker-and-morningside-church; Press Release, Ark. Att’y Gen., Rutledge Sues Jim Bakker for Peddling Colloidal Silver Products to Cure COVID-19 (June 16, 2020), https://arkansasag.gov/news_releases/rutledge-sues-jim-bakker-for-peddling-colloidal-silver-products-to-cure-covid-19.
187. See Morningside Church, Inc. v. Rutledge, No. 3:20-cv-05050-MDH, 2020 WL 5077255, at *1 (W.D. Mo. Aug. 27, 2020) aff’d, 9 F.4th 615 (8th Cir. 2021).
188. Press Release, Mo. Att’y Gen., supra note 186; John Lynch, Televangelist Jim Bakker Will Refund Arkansans Who Bought "Cure-All" Products He Endorsed, ARK. DEMOCRAT-GAZETTE (Sept. 10, 2021, 5:04 PM), https://www.arkansasonline.com/news/2021/sep/10/televangelist-jim-bakker-will-refund-arkansans-who.
189. Compl. at 1-2, 18, 20-22, Minnesota v. Ctr. for COVID Control, LLC, No. 27-CV-22-731 (Minn. 4th Jud. Dist. Jan. 19, 2022).
190. Chris Chmura, Big $100M+ COVID Testing Company to Remain Closed; Investigations Remain Open, NBC BAY AREA (Jan. 21, 2022), https://www.nbcbayarea.com/investigations/consumer/big-100m-covid-testing-company-to-remain-closed-investigations-remain-open/2784274.
191. AMG Capital Mgmt., LLC v. Fed. Trade Comm’n, 141 S. Ct. 1341 (2021).
192. Stopping COVID-19 Fraud and Price Gouging, supra note 21, at 1-2.
193. Id. at 2.
194. Id. at 1-2.
195. This assumes a cumulative rate of inflation of approximately 363.9% from 1977 to present. See, e.g., U.S. Inflation Calculator, https://www. usinflationcalculator.com (last visited Mar. 2, 2022).