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Coronavirus crisis provides fertile ground for online fraudsters

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Via Financial Times

After his usual supplier of medical equipment suffered delays as the coronavirus crisis took hold in March, Ali AlDakkak searched online and found a Malaysia-based company who said they could fulfil his order.

The director of a United Arab Emirates-based group that supplies personal protective equipment to hospitals in the region, he paid more than $30,000 upfront for a large consignment of face masks. They never arrived.

The supposed Malaysian company had vanished — its website wiped from the internet and the phone number diverting to voicemail. “I realised it was a fraud,” said Mr AlDakkak.

He is not alone in being scammed. The chaos of the pandemic has proven fertile ground for fraudsters looking to exploit people’s desperation and a worldwide scramble for PPE. With supply chains upended and demand at a record high, there has been a surge in the number of suspicious websites claiming to sell regulator-approved masks and gloves, and a proliferation of fake safety certificates.

Scammers have tricked individuals and governments into buying items that have not met crucial safety standards, and into paying upfront for orders that never arrive. Websites appear and disappear rapidly, and buyers are asked to pay into bank accounts located all over the world, making the job of catching them all the more difficult.

Graeme Biggar, director-general of the economic arm of the UK’s National Crime Agency, said there had been a “really significant surge in registrations of domain names related to Covid-19” since the pandemic began. His agency had in recent months “intercepted tens of thousands of masks” that were deemed suspicious.

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The UK’s National Cyber Security Centre had also taken down hundreds of websites selling fraudulent virus-related items. Domain registration data show that although sites frequently claim to belong to long-established PPE manufacturers, in reality they were created in the past few months.

Interpol has warned of “an increase in counterfeit medical products, fraud and cyber crime” in relation to coronavirus while the European Commission’s anti-fraud office has opened an inquiry into the import of fake virus products.

In one high-profile case last month, criminals tried to sell a non-existent consignment of 39m masks to a California workers’ union, before the Federal Bureau of Investigation uncovered the scam. Around the same time, an arrest was made after someone attempted to sell 125m non-existent masks and other PPE to the US Department of Veterans Affairs for more than $750m, according to the US justice department.

3M, one of the world’s leading PPE suppliers, said some vendors were falsely claiming to be affiliated with the company, and were selling both counterfeit 3M products and genuine items at “grossly inflated prices”. Mike Roman, chief executive, said it was “working with law enforcement authorities around the world” to stop it, and had filed price gouging and fraud lawsuits in Canada and several US states against sellers purporting to be connected to 3M.

Even when bulk orders do arrive, they are often not what was expected. Mr Biggar of the National Crime Agency highlighted multiple instances of shipments containing far fewer items than ordered. “We can’t be sure it’s deliberate . . . it could be mistranslation,” he said, although several had been reported as suspected fraud. 

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There is at present no typical profile of a PPE fraudster. Some appear to be small-time opportunists looking to make money, but others are thought to be linked to sophisticated organised crime networks. “The majority and the more sophisticated will launder [payments] through several jurisdictions,” said Mr Biggar, adding that some were seeking payment in cryptocurrency.

In Mr AlDakkak’s case, he transferred the large sum of money to a bank account in Germany. He was then told by the seller that, because of a change to its minimum sale requirement, he had to nearly double the size of the order for it to be shipped. At this point, he requested a refund. The vendor stopped responding.

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Once he realised he had been conned, he appealed to the Malaysian embassy in the UAE but has yet to hear back. He plans to ask his lawyer to contact Interpol. “We’ll keep pursuing this, even if it takes time. We have to stop these criminals,” he said.

Many scams are facilitated by the use of fake certificates, which fraudulent sellers use to convince buyers of their credibility. They can show that the seller is authorised to make and sell PPE, is legally allowed to sell into certain geographic regions or that the items have passed relevant safety checks.

“In the past few months we’ve been contacted by authorities around the world for advice about whether a document is fake or real,” said Luca Crisciotti, chief executive of DNV, the certification body. “We’re seeing a lot of fakes.”

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Many fakes are counterfeit versions of certificates issued by genuine certification bodies, but with crucial details changed, such as dates and names. Mr Crisciotti said several governments, which he declined to name, had cancelled “big contracts” for PPE because DNV had spotted forgeries, some bearing the company’s name.

DQS, Nelson Labs and BSI, companies which issue certificates for various European and US medical and safety standards, confirmed that certificates bearing their names — including two that were sent to Mr AlDakkak — were faked.

BSI said that before the pandemic it would come across a fake certificate about once a month. Now it happens daily. For customers, it can be “a minefield,” said Dimple Matharoo, managing director of DQS. “People are being misled” and customers “need to wise up to what’s out there.”

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