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04/22/2020

Fighting fraud to help the front line

Almost immediately after the COVID-19 outbreaks began, 3M substantially ramped up production of N95 respirators; of these, more than 90% are now designated for healthcare workers with the remaining deployed to industries also critical in this pandemic, including energy, food and pharmaceutical manufacturing.

Unfortunately, the outbreak has led to reports of counterfeiting and price gouging connected with our products. 3M has deployed a dedicated team of employees and company resources to work with every state in the U.S. and around the world to take decisive action against those involved in illegal or unethical activity during the pandemic.


William Childs
Senior Counsel
3M Litigation

William Childs, senior counsel on 3M’s Litigation team, is one of the dedicated team members at 3M who is working to track and fight fraud, counterfeiting and price gouging. This 3M team is working with state, national and international law enforcement to help identify and punish perpetrators. Here he describes the work the team is doing and the great partnerships both inside and outside 3M that are making this happen.

What fraudulent behavior has 3M received reports about since the COVID-19 outbreak began?

It runs across a pretty wide spectrum. Some examples are people claiming to have access to large supplies of respirators or other personal protective equipment (PPE), when they don’t. Often those folks will try and secure funds in advance and then disappear once the money is received.

We have also seen some counterfeit products. People are told that they are ordering and paying for 3M N95 respirators or other PPE and when they get them, they are not 3M product. It might not be an N95 respirator at all; it might be a mask that is not designed to reduce the wearers’ exposure to airborne particles. 3M has strict quality standards for its products, and, therefore, products that have missing straps, strange odors, blocked valves, misspelled words, etc. are likely not authentic 3M respirators.

Another thing we are seeing a lot is price-gouging, which isn’t exactly fraud, but it is unethical and illegal in most states in the U.S. 3M has not increased the prices that we charge for respirators as a result of the COVID-19 outbreak, and we aren’t going to increase the prices during the pandemic. We have published our N95 respirators’ list prices on our website to help customers identify and avoid inflated prices. Those prices vary depending on the respirator being purchased, but an N95 respirator averages around one dollar per respirator. We are seeing people trying to sell a single respirator for six dollars, eight dollars, ten dollars – or even more. Sometimes the people who are doing this are claiming they are directly affiliated with 3M, that they are 3M or that they are one of our authorized channel partners and very often they are not. Typically, they have no relationship with 3M at all. 

3M does not condone any of these unethical or illegal activities by 3M authorized channel partners and we will aggressively pursue third parties who seek to take advantage of this crisis.  As an example, we’ve filed a lawsuit in federal court in New York, suing a company that sought to engage in price gouging, claiming to have access to 3M respirators. We have also filed suits in California, Texas, Florida and Canada as part of the company’s national and global efforts to combat fraud, counterfeiting and price gouging of 3M N95 respirators.

Can you describe the team at 3M that has been dedicated to work on combatting anti-fraud/counterfeiting and price-gouging?

The 3M team was created under the leadership of our General Counsel, Ivan Fong, to ensure that 3M uses all the legal tools available to it to combat illegal and unethical efforts to capitalize on the COVID-19 crisis.  The legal department then formed a cross-functional team to bring together the internal and external legal resources needed in this effort. The respirator team in the Personal Safety Division, including the division’s legal counsel, has been working full-steam for months on the many facets of 3M’s response to the COVID-19 pandemic and has also been able to support this cross-functional team with the needed product knowledge, business model insights, channel information and more. 3M litigation attorneys and staff are focusing on possible civil litigation from 3M directly and referrals to state, federal or international criminal authorities. We also have our trademark attorneys doing a lot of work with domain name registrations, trademark violations online, etc. 3M teams from each of global security and compliance  help investigate situations while teams from communications, business legal counsel and government affairs are working hard to get information out to our customers to help them identify and avoid these scams.

What kind of work is the team doing?

Our team is working to both eliminate fraudulent products and price gouging and help customers identify and avoid these situations. We have published our list prices for our N95 respirators so customers can see what they should be paying. We have also created a COVID-19 Fraud hotline that end-users and purchasers of 3M products can call for information to help detect fraud and avoid counterfeit products, along with a companion website for reporting.  We are actively working to eliminate the behavior that is being reported to the hotline by investigating and making referrals to law enforcement where appropriate.

What external partners are you working with to accomplish this?

We have been working with the U.S. Attorney General, governors, state attorneys general and national and international law enforcement. We’ve also had a lot of success working with technology companies like Google, Amazon, Facebook and other online companies who have partnered with us to go after fraudulent behavior.

We have also benefited from the willingness of our outside counsel network to step up and help. We have hundreds of external lawyers who work with us on all sorts of things every year. We put out a call asking for help against fraud and dozens and dozens of law firms asked to be part of it and volunteer their time. A lot of what we have been able to accomplish so far, and what we expect to accomplish going forward, is because of their willingness to help. 

What is the goal?

Fundamentally, 3M is committed to doing everything we can to fight COVID-19 and support healthcare workers . Our cross-functional team has been very focused on only doing things that we think are going to help that goal. We are not engaging in litigation just for the sake of litigation, but to protect those on the front lines of combating this pandemic and stop these bad actors. If we do decide to litigate in these cases, most of the time we are trying to shut bad people down, and not seeking money. If we do recover money, we plan to donate it to COVID-19 charitable efforts.

It’s all about putting as much effort as we can towards getting critical products to the first responders, healthcare providers and critical infrastructure folks who really need this protection. We are focused on getting products to them at a fair price and stopping people who are trying to exploit this crisis.

 

For more information on 3M’s COVID-19 Fraud response, please view these resources:

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