American families know well the pain of school and business closures, remote work, layoffs and travel restrictions that resulted from COVID-19. But the pandemic also brought families a slew of challenges in the form of fraud, price-gouging, canceled prepaid events like vacations, changing refund policies, undelivered services and improbable cures.
Pandemic-related problems were among the “worst, fastest-growing and new” complaints compiled by the Consumer Federation of America in its 2020 survey, which included 34 city, county and state consumer agencies from 18 states. The report was unveiled Monday during a news conference in Washington, D.C.
“Business closings, job layoffs, supply chain disruptions, social distancing requirements, and travel restrictions put huge strain on consumers and businesses, generating complaints about everything from appliance repairs to child care, trash pickup to towing,” said Susan Grant, the federation’s director of consumer protection and privacy. “State and local consumer agencies also dealt with a deluge of complaints last year about price-gouging and COVID-related scams.”
The Los Angeles County Attorney’s Office and the county’s Department of Consumer and Business Affairs went after one company, Insan Healing, for reportedly selling radish paste as protection against the novel coronavirus, said Rafael Carbajal, department director. In April, they rolled out a mobile app so consumers can report price gouging as they encounter it, providing photos, receipts and other evidence. That’s led to thousands of reports. He noted recovery of more than $10 million for consumers.
The Arkansas Attorney General’s Office got a company to replace an HVAC unit that failed under warranty during the pandemic — something the consumer had been unable to do alone.
And North Carolina authorities successfully sued — and barred the price-gouging practices — of a company that offered N95 masks to health care providers and first responders at a massive markup. The practice drew a whopping 2,300 complaints filed with the North Carolina Attorney General’s Office.
They also learned some child care providers insisted on being paid during the pandemic when the service wasn’t available. The providers said the money would “hold the child’s spot” for when child care reopened.
The complaints report said “COVID-19 surcharges” started popping up in restaurants and dentist offices, among other places. “While businesses may have incurred additional expenses to take safety precautions in public health emergencies, these surcharges ran afoul of existing laws or government edicts,” the federation noted.
But the results were mixed as local consumer protection agencies and officials tried to help consumers get refunds for weddings that were canceled and dresses for proms that never took place, Grant said, noting some practices are sketchy but not illegal and the fine print people often overlook can make challenging them hard.
The Federal Trade Commission said separately that COVID-related scams took consumers for almost $500 million.
Tip of the iceberg
Pandemic-related problems were not even the biggest category of consumer complaints in 2020. As in past years, auto-related complaints — misrepresentation in advertising or sales, deceptive financing, vehicles that don’t run, bad repairs, etc. — topped the list. Home improvement and construction again came in second, with complaints that included poorly executed work, contractors who don’t show up or complete the job after they’re paid and people who lack a license and sometimes the right skills.
Demographics play a role in how consumers lose out, said Chuck Harder, Arkansas deputy attorney general. Arkansas is rural and residents need autos to get to work, to school and to the store. But many struggle to make ends meet and some may not understand complicated financing arrangements, so they can fall prey to predatory lending, primarily when buying things like cars or appliances. And though a state usury law limits interest rates on customer loans to 17%, many companies use rent-to-own deals that skirt those limits. That’s deceptive, but not illegal, making resolution difficult, said Carter.
The agencies participating in the survey — which were a more-than-representative sample, which still covers less than half the nation — received 280,413 complaints and managed to either get back or save nearly $263 million for consumers in 2020. Regulators used tools ranging from lawsuits to informal mediation and administrative action, the federation said. But a lot of complaints went unresolved.
The rest of the top 10 complaints, after auto and home improvement, are:
- Landlord/tenant: shoddy conditions, lack of repairs, illegal evictions and deposit and rent disputes.
- Credit/debt: billing and fee disagreements, predatory lending, illegal debt collection, among others.
- Services: misrepresentation and shoddy work among the most common.
- Utilities, mostly billing and services, including by cable companies.
- Retail sales: deception, low quality merchandise, failure to deliver, and issues with rebates, coupons and gift cards.
- Travel: surprise costs and related misrepresentation, refund problems, etc.
- (Tie) Internet sales and health products/services
- (Tie) Pandemic complaints, fraud and problems with major appliances and furniture.
Grant and others said the pandemic complaints are more prevalent than the report might indicate because they show up in every category, but some state and local agencies don’t break them out to note their pandemic roots.
Aiming at bad actors
State and local governments enacted new laws or rules to help protect consumers, many related directly to the pandemic, according to the report.
New York City, for example, created rules to help those with limited English speaking ability avoid deceptive debt collection practices.
Los Angeles County’s Board of Supervisors banned retaliation against workers who report employers for public health violations. It also put $5.5 million into boosting counseling services to help people avoid eviction.
Maryland, California, Massachusetts and New York all beefed up price-gouging ordinances, some specifically targeting wild charges for pandemic-related basics like hand sanitizer, face masks and disinfectant wipes. In New York, for example, retailers charged $100 for a pack of Purell wipes and $79 for hand sanitizer, the report said, while one store was selling a gallon of milk for $9.19. New York City issued more than 17,000 violations to businesses for overcharging.
The federation said consumers should try to resolve complaints themselves, but if they can’t, they should seek help. There are a number of resources, including state and local consumer protection agencies and state attorney general offices. The federation also offers a list of tips for avoiding pandemic-related issues, which often overlap others, and links to agencies that can help.