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Drop-shipping Business Misleads Michigan Consumers About Face Masks During COVID-19 Crisis
April 14, 2020
Michigan Attorney General Dana Nessel’s office sent a cease and desist letter to a Wyoming business for price-gouging and misrepresenting the types of face masks it was attempting to sell to an employee of a Lansing-area hospital, among other violations of the Michigan Consumer Protection Act (MCPA).
Meanwhile, the number of price-gouging complaints reported to the Attorney General’s office as of 7 a.m. today was more than 3,500.
The letter was sent Monday to Seek Everest LLC after the Attorney General’s office received a complaint from an anesthesiologist at Sparrow Hospital. Though formed as a business entity in Wyoming, Seek Everest transacts business online and does not reveal its true base of operations. The business was attempting to sell the medical employee face masks advertised as having the N-95 designation, which is assigned by the National Institute of Occupational Safety and Health, part of the Centers for Disease Control and Protection (CDC). However, the masks are actually being imported from China and might not offer the same protections as the N-95 versions. The company also indicated the masks were approved by the Food and Drug Administration (FDA) and are “medically sterile,” providing a false sense of security to the consumer.
The seller’s website interchangeably refers to the masks as N-95s and KN-95s, the latter of which are of particular concern due to the number of counterfeit face masks coming from China. The FDA has been reluctant to approve any masks coming from China and only just recently announced its willingness to consider such imports for approval.
The Attorney General’s letter also explains it appears Seek Everest is operating a drop-shipping business, but is trying to make consumers believe it is a manufacturer of goods. Drop-shippers create websites to collect payments from consumers, and then simply order the product from another company to have it shipped to the consumer. Often, this is done at a substantial mark-up, which means the consumer is also being price-gouged. The Attorney General’s office has issued a consumer alert on ways people can protect themselves from drop-shipping scams.
The Attorney General’s office attempted to contact the company for more information on its manufacturer and model of the face masks being sold, but no response has been offered.
The Sparrow Hospital employee’s complaint was corroborated by 16 additional consumer complaints about Seek Everest that were obtained by the Attorney General’s office from the Better Business Bureau. A majority of those complaints focus on Chinese-manufactured ski pants that Seek Everest sold to consumers. Many of the ski pants were defective or did not match the sizes listed on the website, and Seek Everest denied refunds or other assistance when contacted by purchasers.
“Price-gouging, misrepresentation of goods and services, attempting to mislead or deceive customers, and failing to provide refunds appropriately – this all adds up to illegal activity under Michigan law and I won’t tolerate it,” Nessel said. “This business appears to have a poor track record, and now it is potentially putting Michiganders’ lives at risk by selling face masks under false pretenses. This type of behavior is not only unlawful, it’s morally reprehensible and it must stop.”
Seek Everest has 10 days to provide the Attorney General’s office with assurances of voluntary compliance. The company must agree to not sell or market any products to Michigan consumers, and provide the office with contact information for anyone in Michigan who purchased masks from the company. The Attorney General’s office could move forward with a formal investigation or take steps toward filing a civil lawsuit.
Since it began tracking them in early March, the Attorney General’s office has received 3,541 price-gouging complaints related to COVID-19. That includes 1,638 complaints received through its website and 1,903 taken by phone through its Consumer Protection tip line.
Consumers can?file a complaint online?or by calling the?tip line at 877-765-8388. Hours?of operation are between 8:30 a.m. and 4:30 p.m. Monday through Friday.??