GovShop is part of the National Governors Association Task Force on the COVID-19 supply chain and was recently briefed by the FBI’s Internet Crime Complaint Center on specific issues buyers should look for when purchasing personal protective equipment (PPE), medical equipment, and more. With supplier fraud on the rise, detecting fraudulent activity is an extremely critical part of the skillset needed to purchase PPE, medical equipment, testing kits, and more. This is an integral component of GovShop’s work to connect vetted, verified suppliers of life-saving equipment with those who need it urgently.
GovShop is working in collaboration with the National Governor’s Association, the Defense Joint Task Force, North Carolina State University’s Supply Chain Center, American Hospital Association, and others to maintain a national registry of “Verified” and vetted suppliers. Suppliers are verified through a rigorous process and then given identifying badges so you can purchase critical COVID-19 supplies and equipment with confidence. Access the PSF Verified COVID-19 Supplier List on GovShop.
Directives from the FBI on recognizing and countering fraudulent suppliers are as follows:
Advance Fee Schemes – In advance fee schemes related to purchasing, a buyer pre-pays a broker or seller but then receives nothing in return. Several times now, sellers or brokers have acted as legitimate sellers or impersonated a seller you may be familiar with. In one such case, an individual claimed to represent an entity with whom the purchasing agency had an existing business relationship. By the time the purchasing agencies became suspicious of the transactions, much of the funds had been transferred outside the reach of U.S. law enforcement and were then unrecoverable.
Business Email Compromise – In BEC schemes, fraudulent sellers/brokers spoof email addresses by using an almost identical email to communicate with a buyer to collect payments. During the COVID-19 pandemic, with many people working from home, phone calls impersonating personnel from a known supplier have also been common.
What Risk Factors to Look Out for to Minimize Fraud:
- Seller or broker initiates the contact but has no previous relationship; often, there is no public record of the seller.
- Seller cannot explain where the products will be sourced from or their country of origin.
- Buyer cannot verify with the product manufacturer that the distributor/broker is legitimate. 3M, for instance, is still using just their 6 primary distributors.
- A general urgency and pressure is expressed to transfer funds or lose the product
FBI Recommended Mitigation Strategies:
- Have a trusted party verify the company and/or product for you. GovShop does exactly this by assigning “PSF Verified” badges to suppliers. Working in conjunction with partners such as the National Governor’s Association, NC State University, and others, we are committed to connecting vetted suppliers to the government agencies and healthcare providers who need them.
- Set up a domestic escrow account and release payment only after product is received and verified domestically.
- When contacted by a person you don’t know, reach out to your supplier contacts. Fraudulent suppliers often research which suppliers you typically work with and go to great lengths to impersonate them. Do the due diligence and speak with your contacts at the supplier via their official direct line.
- Report any suspicious activities to the FBI. Your alerting the FBI will be key to flagging those who are using the COVID-19 pandemic fraudulently.
We also recommend reporting any suspicious activity to GovShop so we can flag any suspicious supplier and share it via our networks across the country. Please email us at firstname.lastname@example.org.
Other Recommended Reads:
- Responding to COVID-19: Cleaning/Disinfecting Products and Services
- Responding to COVID-19: Verified Personal Protective Equipment Suppliers (PPE)
- FDA Approved Suppliers of COVID-19 Testing Kits