Should a Working Group to Prevent Fraud Related to the COVID-19 Pandemic be Established? (H.R. 6735)

What is H.R. 6735?

(Updated February 1, 2021)

This bill, known as the COVID-19 Fraud Prevention Act, would establish the Consumer and Investor Fraud Working Group to prevent fraud during the COVID-19 pandemic. The working group would report monthly regarding resources available to consumers, public enforcement actions, and related consumer complaints.

Argument in favor

Attempts to defraud consumers during the COVID-19 pandemic are alarmingly common. Given the depth of the economic crisis the pandemic has plunged many households into, it’s especially important to protect Americans from fraudsters at this moment. The working group that this bill establishes would play an important role in keeping American consumers, and their wallets, safe during these uncertain times.

Argument opposed

This bill is unnecessary because existing federal agencies, including the Consumer Financial Protection Bureau, Securities and Exchange Commission, and Federal Trade Commission (FTC), are already doing an excellent job of protecting customers during the pandemic. The FTC is providing advice on its website regarding avoiding COVID-19 scams for both consumers and businesses, while the SEC is suspending stocks and the CFPB is tracking complaints related to COVID-19 scams.

Impact

Consumers; consumer protection against COVID-19 scams; the working group; and relevant federal agencies.

Cost of H.R. 6735

A CBO cost estimate for this bill is unavailable.

Additional Info

In-Depth: Sponsoring Rep. Cindy Axne (D-IA) introduced this bill to protect Americans against scams intended to take advantage of them during the COVID-19 pandemic:

“In uncertain times, many families and individuals can be unsure where to turn and what information to trust – and unfortunately not everyone will have Iowans’ best interests at heart. Any and all malicious attempts to mislead or rip off Iowans, some of whom may already be in dire financial situations, must be fought with every resource we have available. With this legislation, we can protect Americans and guard our families and communities from deception or financial ruin.”

Of Note: The Securities and Exchange Commission (SEC) has issued more than 40 suspensions for stocks believed to have inaccurate or unreliable information in connection with COVID-19. Additionally, from April to March 2020 alone, the Consumer Financial Protection Bureau (CFPB) received over 53,000 consumer complaints, including reports of attempted collection of debts not owed and false statements, in connection with COVID-19.

To help consumers protect themselves, the Federal Trade Commission (FTC) provides advice on its website to help consumers and businesses protect themselves from various common COVID-19 scams.

Media:

• Sponsoring Rep. Cindy Axne (D-IA) Press Release