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Law360 (April 2, 2020, 7:18 PM EDT ) The New York Attorney General on Thursday slapped a CBD company with a cease and desist for allegedly using fake news to peddle bogus COVID-19 cures, the latest move by officials to contain scores of scammers using the coronavirus pandemic to pick peoples' pockets.
Finest Herbalist allegedly spammed consumers with emails and text messages falsely touting CBD oil as a cure for COVID-19, including one message with a fake Fox News article claiming "one mom has found a solution" to the pandemic in CBD. Consumers were also told they could protect themselves from COVID-19 with "Immunity Oil," according to the letter.
"By misrepresenting the effectiveness of products against COVID-19, companies like Finest Herbalist are giving consumers a false sense of security, putting their very lives at risk," Attorney General Letitia James said in a statement Thursday, adding that her office would aggressively target COVID-19 scammers.
While public health officials scramble to stem the spread of the novel coronavirus, prosecutors and regulators have been busy holding off the proliferation of false advertising and price gouging, auguring a flurry of enforcement actions as the crisis intensifies.
Richard Lawson, a Gardner Brewer Martinez-Monfort PA partner who handled hurricane-related scams as Florida's consumer protection czar, told Law360 that the unprecedented crisis was a scammer's dream come true.
"This is a whole new level," he said. "Three weeks ago, I don't think anyone thought 10 million people were going to lose their jobs so quickly. People are going to be desperate ... Scammers will jump on that, and regulators are going to try to make a big splash to help deter that."
Coronavirus-related text messages still form a small slice of the sprawling spam ecosystem, but complaints about the messages have soared since mid-March, according to a report by AdaptiveMobile Security. Tens of thousands to hundreds of thousands of consumers have been targeted in recent weeks, according to the cybersecurity firm's estimates.
Regulators have taken note. On Tuesday, the U.S. Food and Drug Administration and the Federal Trade Commission warned an ex-NFL player's company Neuro XPF from saying CBD could "prepare your body to fight a coronavirus infection."
The agencies issued similar warnings in March to seven companies said to be hawking essential oils, tinctures and colloidal silver as products that could prevent or treat COVID-19. The regulators noted that a vaccine is likely a year away and no products are approved to treat the disease.
Lawson said the warnings and letters will likely escalate to legal action in the coming weeks.
"Consumer complaints will be making their way to regulators in the next three to four weeks, and then you'll really start to see the action," Lawson said. "Governments don't usually move fast, but they are right now. I think you'll see enforcement actions in pretty short order."
Several U.S. attorney's offices said last month they were coordinating with state law enforcement and launching hotlines and education programs to root out pandemic-related fraud, following a directive from U.S. Attorney General William Barr.
State attorneys general have also been active. James' office got started early in the coronavirus' explosion in the U.S. in March, when she sent cease and desist letters to companies claiming their products "beat coronavirus" and had clinical documentation to prove it.
Her office has also targeted commentators peddling bogus cures, including a religious TV program and right-wing conspiracy theorist Alex Jones, who told viewers of his internet show that toothpaste sold on his InfoWars site could "kill the whole SARS-corona family at point-blank range."
James said she has also targeted hundreds of New York businesses for pandemic price-gouging, including stores charging as much as $79.99 for 1,200 milliliter bottles of hand sanitizer.
In Florida, a price-gouging hotline set up by Attorney General Ashley Moody has been ringing off the hook, with more than 1,200 reports last month, her office said. Moody has also slapped more than 40 companies with subpoenas related to alleged third-party price-gouging on Amazon, citing hand sanitizer markups as high as 1,662%.
--Editing by Haylee Pearl.
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