Fraudsters spared no time before cashing in on public anxiety surrounding the spread of the coronavirus. Within a month of the initial outbreak in China, scammers began circulating phishing emails which appeared to come from the CDC, cdc.gov, but actually came from a fraudulent domain, cdc-gov.org. The emails contained a malicious link which alleged to be a list of new COVID-19 cases published by the CDC, and urged the recipients to open the page that appeared to point to the legitimate CDC website, cdc.gov. However, as with all phishing emails which appear to come from a reliable source, the included link instead directed recipients to a fake page which was intended to obtain individual’s user names and passwords.
In addition, SMiShing attacks, similar to phishing, but conducted through SMS text messages, also surfaced, using legitimate fears of the coronavirus as a clickbait to entice people to access malicious sites. One such text, personalized with the recipient’s first name, included a link promising a free iPhone 11 to purportedly encourage individuals to “spend time at home.” This particular scam caught special attention when U.S. Representative Katie Porter tweeted a screenshot of the text warning consumers to be diligent and on the lookout for those trying to take advantage of the pandemic. Unfortunately, for those that clicked the link, the promised iPhone was not delivered, but, instead, the scammer reaped the benefit, at the expense of the unguarded consumer.
With fears surrounding the economic impact of the global pandemic, fraudsters turned their immediate attention to investors, circulating claims that certain publicly traded companies had developed products to prevent, detect or cure the coronavirus, and were expected to see a significant increase in stock value upon release of the product. However, the U.S. Securities and Exchange Commission (“SEC”) thereafter issued an Investor Alert to warn consumers that these claims may be part of a “pump and dump” scheme, where fraudsters boost, or “pump,’ the price of stock with positive, but often false information, about a company, and then sell, or “dump,” their shares at heightened prices. After the fraudster profits, the stock price typically falls and the unsuspecting investors not party to the scam lose their money.
As the global crisis continues to wreak havoc on public health, fraudsters continue to exploit consumers’ fears for personal gain. Worried for their health and concerned over the limited access to testing, individuals are aggressively seeking products which will prevent, detect, or otherwise treat the coronavirus. Hundreds of products have surfaced promising to be the exact solution virus-frightened consumers are searching for, but the FTC warns there are currently no approved vaccines or drugs available to treat or prevent the virus. Not only are the products not approved treatments but consumers credit information is often collected for illegitimate purposes when the consumer purchases the fraudulent product. In fact, the U.S. Department of Justice recently filed its first enforcement action against COVID-19 fraud alleging that the operators of website coronavirusmedicalkit.com engaged in a wire fraud scheme by offering illegitimate World Health Organization (“WHO”) vaccine kits in exchange for a $4.95 shipping fee, which consumers paid by entering credit card information.
As we all continue to be vigilant with our health, we must also be mindful that fraudsters will continue to adapt to the situation. Just like the virus, fraud will continue to evolve, and consumers must protect themselves, not only from the known frauds which have been exposed but from those which are yet to come. Consumers must be on the lookout for:
Fraudsters will not relent and, as the coronavirus continues to spread, scammers will continue to develop new methods to prey on consumer’s fears and the unique situations arising from the virus. Withum is committed to the prevention and detection of fraud, contact our team for further assistance.