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TRADE IN COUNTERFEIT MEDICAL AND PROTECTIVE HEALTH GOODS SPIKING DURING PANDEMIC

COUNTERFEIT
Archives, Global Trade Daily, International Trade

TRADE IN COUNTERFEIT MEDICAL AND PROTECTIVE HEALTH GOODS SPIKING DURING PANDEMIC

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Making matters worse

As the coronavirus pandemic continues to alter lives around the world, predators have seen opportunities to exploit the global health crisis by marketing and shipping counterfeit medical equipment, devices, and pharmaceuticals. In the few months since the beginning of the pandemic, illicit trade in counterfeit medical goods is both widespread and global in nature.

Authorities in the UAE shut down two factories, finding 40,000 fake sanitizers that were actually body sprays. In Cambodia, authorities seized three tons of fake sanitizer and nearly 17,000 gallons of fake alcohol. Australia’s Border Force intercepted shipments of counterfeit and otherwise faulty personal protective equipment.

Playing whack-a-mole with counterfeit goods

EUROPOL has cautioned that fake blood-screening tests, sanitizers, and pharmaceutical products are increasing in volume in the EU as criminals take advantage of shortages of genuine medical products. EUROPOL is monitoring the trade in counterfeit and substandard products by “listening” to social media platforms, following conversations that mention fake products. The agency reports many new online platforms have cropped up in response to coronavirus to profit illegally from illicit trade in fake medical goods.

Enforcement activity has also ramped up in the United States in response to the significant increase in criminals attempting to capitalize on the pandemic. In mid-April, Immigration and Customs Enforcement (ICE) announced Operation Stolen Promise, a joint effort by experts in global trade, financial fraud and cyber investigations to combat smuggling of counterfeit safety equipment and test kits. The operation quickly shut down over 11,000 COVID-19 domain names for illicit websites. After seizing test kits at an Indianapolis express consignment facility, Customs and Border Protection (CBP) announced it is “targeting imports and exports — mainly in the international mail and express consignment cargo environments — that may contain counterfeit or illicit goods”.

More data, better enforcement?

In early May, ICE’s Homeland Security Investigations announced an unprecedented partnership with private sector companies including Amazon and Alibaba to combat price gougers and scammers online. But will the effort be sufficient? The pandemic has exposed how vulnerable consumers are and how difficult the challenges are for law enforcement, prompting new discussion of potential changes to data collection practices that will better safeguard consumers while aiding law enforcement. Policymakers are also considering ways to shift more burden to the private sector engaged in online sales and trade.

The Country of Origin Labeling (COOL) Online Act was introduced in the U.S. Senate on May 13. The sponsors noted that with the pandemic causing Americans to stay home, online commercial activity has increased, but that products sold online are not sufficiently transparent. The COOL Online Act would require that buyers of products sold online be told the country where the product was manufactured and where the seller is located.

CBP is currently conducting the 321 E-Commerce Data Pilot which requires private sector participants in the pilot program to transmit a significant amount of data to CBP regarding products shipped to the United States. What is yet unclear is whether companies in the supply chain and e-commerce ecosystems will be required to verify that the information submitted to CBP is accurate and whether they will be required to take the step of rejecting products or packages before facilitating shipment to the United States.

Such a requirement obligates private sector entities to take some measure to screen and prevent the export of non-compliant or suspect goods before they leave the country of export. Absent such an obligation, most, if not all, of the burden will remain on CBP – and its counterparts around the world – to protect public safety.

Countering the counterfeiters

Medical communities around the world are still grappling with a virus that has no known cure while law enforcement agencies work to combat the growing volume of counterfeit and substandard medical equipment and pharmaceutical goods marketed by criminals. Meanwhile, international crime watchdog INTERPOL has ominously issued a warning that it expects global markets to be flooded with fake pharmaceuticals as soon as a vaccine does become available.

The policy landscape continues to shift in various ways in the wake of this health crisis. Governments are actively engaging with the private sector regarding potential changes to the collection and sharing of data — and, how both should act on that data — to more effectively prevent counterfeit and illicit goods from even leaving the country of origin in the first place.

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Tim Trainer

Tim Trainer was an attorney-advisor at the U.S. Customs Service and U.S. Patent & Trademark Office. He is a past president of the International AntiCounterfeiting Coalition. Tim is now the principal at Global Intellectual Property Strategy Center, P.C., and Galaxy Systems, Inc.

This article originally appeared on TradeVistas.org. Republished with permission.
Archives, Commentary, Global Trade Daily

3 Common Invoicing Scams and How to Avoid Them

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Invoicing and payments fraud can take a variety of forms: invoices from fictitious companies, invoices for products that were never delivered, for unusually high amounts, or as part of a phishing scheme. As your business grows and your vendor list gets larger, how do you stay on top of the validity of each invoice? Below are some common invoice fraud schemes and how you can prevent them.

CEO Impersonation

Imagine you’re an accountant and you receive an email from your CEO with a request for an urgent payment. He or she is finalizing the acquisition of another company and need you to wire money immediately in order to close the deal. You receive a follow-up phone call from a third party with the wiring instructions and authorize the payment as instructed. Only later do you find out that the email wasn’t really from the CEO and both the email and the phone call were an orchestrated scam.

This type of fraud, known as “business email compromise,” “CEO fraud,” or “CEO impersonation” was responsible for over $675 million in losses last year alone, according to the 2017 FBI Internet Crime Report. Using a spoofed email address (a common method for phishing schemes), fraudsters specifically target individuals responsible for wire transfers or invoices within an organization and solicit payments from them. They thoroughly research a company’s recent activity and target companies that conduct a lot of foreign transactions via wire transfer, since those payments are difficult to reverse. The authority of the sender, the urgency of the request, and the spoofed email address create a very convincing hoax.

                              Vendor Impersonation

Fraudsters may impersonate trusted vendors as well. Using a spoofed email, they may send notice that they’ve recently changed addresses or ACH routing information along with a fake invoice. Similar to CEO impersonation, this type of fraud happens when someone impersonates a vendor you already conduct business with. Fraudsters specifically target an employee within accounts payable, hoping that the payment will go through long before anyone questions its validity.

Awareness is key to prevent CEO and vendor impersonation fraud from happening in your organization. If you receive an email that seems suspicious, pay attention to the tone of the email: Does it sound like something your CEO would send to you? Is it their usual tone, or is it overly formal? Another thing to consider: Is it unusual for you to receive a wire transfer or urgent payment request from your CEO or this particular vendor? If you’re unsure, just ask, especially for large amounts.

Shell Companies

The creation of a shell company is one of the easiest ways for an employee to perpetrate an invoicing fraud scheme. A shell company only exists on paper, provides no services, and produces nothing. This type of fraud is often an inside job; the employee might set up the entity in a friend’s or relative’s name and invoice their employer and collect the payments. Typically, the employee will have information on the way the invoices are processed (or may even be the one paying them), so they know exactly what threshold to stay under to avoid further approvals, potentially remaining undetected for years.

Shell companies can be difficult to distinguish from real companies, but there are a few red flags. Be wary of invoices that have vague or unspecified services – this doesn’t necessarily indicate fraud, but services never rendered are a lot harder to detect than products never delivered. Are the invoices you receive numbered in sequential order? This may be because they have no other customers, and you’re the only one receiving the invoices. If you suspect it’s a fake invoice from a shell company, keep an eye out for other red flags (typos, grammatical errors). If it’s from a vendor you don’t recognize, then be cautious. Look closely at the address, tax ID number, and phone numbers – one of these might match one of your employees.

 

Josephine McCann is a Senior Marketing Associate at AppZen,the world’s leading solution for automated expense report audits that leverages artificial intelligence to audit 100% of expense reports, invoices and contacts in seconds.