Coronavirus Scams Surging Across Illinois and Experts Predict More

Federal and local officials have gotten thousands of fraud complaints. Stimulus checks will create another tidal wave of fraud, authorities warn.

(Illustration: Justin German/BGA; Photo: iStock)

As opportunists and scam artists look to make a quick buck off the COVID-19 pandemic, hundreds of Chicagoans are inundating City Hall with complaints: $80 toilet paper, $50 hand sanitizer bottles and $15 jugs of vinegar.

And while price gouging is the most prevalent complaint, experts are sounding the alarm on bogus cures, fake deals on protective gear and con artists posing as government officials.

“This is the worst I’ve seen, and I’ve been doing this for 32 years,” said Steve Bernas, CEO of Better Business Bureau of Chicago and Northern Illinois. “I’ve never seen a calamity that would affect so many.”

Through Monday, the Federal Trade Commission fielded more than 540 fraud complaints related to the outbreak in Illinois, according to the agency. The Illinois attorney general’s office has reported handling almost 1,300 price-gouging reports.

And in Chicago, city officials have issued two civil citations for price gouging out of more than 400 complaints filed in March through mid-April, according to a spokesman for the city’s business affairs department. In 2019, there were only two complaints of price gouging the entire year, he said.

The department has three investigators and one attorney working the avalanche of cases, and two additional city investigators were temporarily assigned in March to handle the demand, said Isaac Reichman, a spokesman for the city’s Department of Business Affairs and Consumer Protection.

Among the many cases are six complaints against Hana’s Food & Deli, a convenience store on the Far South Side’s Avalon Park neighborhood accused of charging $80 for a 36-roll case of toilet paper. Four of the complaints all came on the same day, March 15. Reichman said when investigators visited to investigate the complaints, no violations were found.

Mahmoud “Mike” Badawi, who co-owns the store with his wife, said the complaints stemmed from a misunderstanding when one customer asked to bypass his one-roll-per customer rule and offered to buy his entire supply.

Badawi said he jokingly told the customer no, and that he would have to charge $80 for an entire case. He told the Better Government Association he thinks all the complaints stem from that one exchange.

Badawi, who has run the store since the late 1980s, acknowledged raising his toilet paper price 50 percent to $1.49 per roll after his longtime supplier, Dearborn Wholesale Grocers on West 79th Street, more than doubled its price to $50 for 36 rolls. None of the complaints to the city were about the $1.49 markup.

“I wasn’t happy,” Badawi said in an interview about the higher price from Dearborn, but he reluctantly paid it because he needed to provide the product. During a recent visit to his store, Badawi showed a BGA reporter a sales receipt from Dearborn Wholesale displaying the $50 price.

Mahmoud Badawi, owner of Hana's Food & Deli on the Far South Side, shows a receipt for $50 a wholesaler charged his business for a 36-pack of toilet paper. (Madison Hopkins/BGA)

Although Badawi never filed a price-gouging complaint against Dearborn Wholesale, city records show others did. In fact, City Hall received nine price gouging accusations last month from customers of Dearborn Wholesale’s two locations, one at a West Garfield Park warehouse, which is open to the public, and the other on 79th Street, which serves retailers.

Dearborn Wholesale officials didn’t respond to repeated calls and messages seeking comment. Most of the complaints made to the city accused the wholesaler of overcharging for toilet paper and bleach, records show.

Reichman said city inspectors went to Dearborn Wholesale’s West Garfield Park location after the complaints in mid-March but there was no toilet paper in stock, and investigators found no violations.

“When we visited, there was no evidence of price gouging since they were out of stock of toilet paper,” Reichman said. “We also follow up with complainants when we receive complaints to look for proof of price gouging, so these investigations are still ongoing.”

The BGA obtained a city database of 286 complaints through the end of March that listed complaints across the city. The city received an additional 129 complaints in April throughout the city, Reichman said.

Price gouging citations can carry fines from $500 to $10,000.

Chicago residents with coronavirus-related complaints should call the city’s 311 line to ensure their issues are directed to the appropriate authorities, Reichman said.

Throughout the state, Illinois Attorney General Kwame Raoul’s office is also working through hundreds of additional complaints, but has not yet brought any civil charges, a spokeswoman said.

“We are focused on assisting residents through this crisis by stopping any unlawful price gouging right away,” spokeswoman Tori Joseph said in a statement. “To that end, we are contacting businesses directly, requesting evidence to show that price increases are justified, and getting businesses to agree to change their conduct.”

She said the office “will not hesitate” to address egregious and unlawful conduct through the courts when necessary, but so far “we are pleased that businesses have been cooperative.”

Government and other consumer fraud experts said they are bracing for another, even more intense, wave of scams as individuals and businesses receive federal stimulus checks from the $2.2 trillion federal stimulus package recently signed into law by President Donald Trump.

“This money is going to be a particularly desirable target for those who are motivated to commit fraud,” said Kelly Frailing, a disaster-related fraud researcher and an associate professor of criminology and justice at Loyola University New Orleans.

She said local officials typically are overburdened during such a crisis so what little policing there is on these types of crimes likely will be handled by federal authorities.

“I suspect most of the attention on fraud from law enforcement is at the federal level, as lower level agencies simply don’t have the luxury to focus on this crime,” Frailing said.

Already, federal and local officials are fielding hundreds of complaints of fraudulent sales offers, identity theft, fake charities and other scams as crooks look to take advantage of distracted authorities and a vulnerable and frightened public.

Nationally, the FTC said there have been more than 17,000 fraud complaints for a loss of $13 million, and a median loss of $568 through Monday.

“We saw a lot of scams develop very quickly related to COVID-19,” said Todd Kossow, director of the FTC’s Midwest Region based in Chicago.

Among the most prevalent are calls or emails claiming to be from Medicare, Centers for Disease Control and Prevention and other government bodies. These scammers may ask for Medicare, Social Security or credit card numbers with the phony promise of a coronavirus prevention kit or a vaccine, he said.

“We know there are no vaccines,” Kossow said.

The FTC and the U.S. Food and Drug Administration have also mailed warning letters to companies purporting to treat or ward off the virus, including a Missouri-based company tied to disgraced televangelist Jim Bakker, who used his television show to hock a silver “solution” that he claimed would rid a patient of COVID-19.

Kossow said his office is coordinating efforts with numerous state and federal agencies and organizations, from the FBI to the Better Business Bureau.

Bernas, of the BBB, said his office is seeing a broad range of complaints, including a south suburban lawn company warning mosquitoes will carry the virus and robocalls stating air-duct cleaning will protect families from COVID-19. The lawn care company issued a public apology, he said.

“We’re early into this,” Bernas said. “Many people don’t realize they’re getting scammed yet.”

Other experts told the BGA that 90 percent of scams go unreported, and the elderly — a prime target for fraud — are particularly reticent to admit they were bamboozled, usually out of embarrassment.

Seniors are highly anxious about becoming sick and scammers know it, said Terri Worman, associate state director for advocacy and outreach at the American Association of Retired Persons in Illinois.

“They are doing texts, they’re doing phone calls, they’re doing emails,” Worman said. “A vaccine, a treatment, a cure for COVID-19. Great deals on getting masks. ‘Just give me your credit card right now and I can send you enough masks to get you through this.’ Seniors are really scared about going out and they are looking for masks.”

Chicago Ald. Byron Sigcho-Lopez, 25th, on the West Side said he’s concerned about the lasting effects of scams.

“At a time when we should be doing wellness checks on seniors, the fraudulent calls unfortunately make our jobs harder,” he said, adding that he’s personally taken a handful of fraud and price gouging complaints.

Jean Bohnhoff, 66, of Effingham was incensed to have two scam operations call within one week. Bohnhoff, a former director of the Illinois Department on Aging, is familiar with scams targeting the elderly.

For one call, she immediately confronted the person on the phone who said her government check related to COVID-19 was ready. For the other, she played along, drawing out the scam pitch, even giving the fraudster a fake account number.

When the scam artist called back for a correct account number, Bohnhoff said she let the person have it.

“I said ‘how dare you go against the older, vulnerable adults.’”