Fighting Fraud

Distributors Offer Expertise And Experience 
Identifying Quality Products
Distributors Offer Expertise And Experience Identifying Quality Products

An unforeseen challenge for the surging demand for personal protective equipment in response to COVID-19 was the emergence of a parallel PPE marketplace run by opportunistic brokers and riddled with fraudsters.

This new broker market is not part of the supply chain. Let’s be clear:

Distributors
  • Purchase and deliver verified safe, FDA-approved products from the factory to the doorstep of healthcare providers.
  • Operate under long-term contracts with factories, hospitals, and nursing homes.
  • Have deep expertise in identifying quality and efficacy in products.
  • Stick to agreed-upon pricing based on long-term contracts even as demand increases.
  • Jump into action to rush products where they are needed.
Additionally, distributors have been working with healthcare providers to determine supply availability, identify appropriate product substitutions, vet alternative suppliers and project estimated delivery dates.

Most of these new brokers had no experience in healthcare supply chains. They sourced products of unknown quality, including counterfeit products, from unknown vendors and auctioned those products to the highest bidder, creating a pricing frenzy artificially inflating the cost of the authentic product and consuming raw materials that could have been used for established high quality products. Often, these brokers failed to deliver the promised products.

The increase in fraudulent activity dealing with the purchase of pandemic-related supplies even prompted the FBI and other government agencies to step in. In March, the FBI asked the medical community to exercise due diligence and appropriate action "when dealing with any vendors with whom they have never worked and/or of which they’ve never heard, and when relying on unidentified third-party brokers in the supply chain."

Government Resources for Reporting Counterfeit Products


Tips: FBI, tips.fbi.gov
Cyber scams: Internet Crime Complaint Center, ic3.gov

National Center for Disaster Fraud, 866-720-5721 or 
disaster@leo.gov

National Intellectual Property Rights Coordination Center,
iprcenter.gov.


Executive Briefing | January - February 2021

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