New legislation is set to crack down on testing companies and others exploiting the surge in COVID-19 cases with overpriced and poorly-delivered virus tests by increasing fines for consumer fraud to $25,000.
State Senator Zellnor Myrie introduced the COVID-19 Fraud Accountability Act on Dec. 24, saying that as demand for PCR and at-home rapid COVID tests has reached an all-time high, "bad actors" had started to exploit the surge "to seek ill-gotten profit from New Yorkers."
He cited false promises of 48-hour results turnaround times to sudden price increases on at-home test kits as evidence of the "white-collar crime."
In Brooklyn, authorities are already on alert for COVID-19 testing fraud. Just last week, Brooklyn-based laboratory LabQ Diagnostics was issued a warning by Attorney General Letitia James after misleading consumers about wait times for COVID-19 tests, which is illegal.
In that case, the diagnostics lab, which runs dozens of testing sites across the city, allegedly advertised a turnaround for the tests of 48-hours, but a number of people were left waiting over 96 hours, according to complaints to James’ office.
Another New York City testing lab, Labworq, was also cautioned for guaranteeing 24 hour results that have allegedly taken more than five days.
"In normal times, we should not tolerate scams that target New Yorkers or their wallets," Sen. Myrie said.
"But at a moment when all of us are suffering the effects of this pandemic, we must make extra effort to deter fraud and punish it when it occurs."
The new law would also increase the penalties for businesses price-gouging at-home test kits.
The Attorney General's Office said it had documented complaints of $14 or $25 COVID test kits being illegally sold for double or even triple that amount.
Price gouging is already illegal, however the legislation would set the minimum penalty for ramping up test prices to $25,000, or three times the amount of any ill-gotten gains.
"My bill would dramatically increase the cost of doing business for these white-collar fraudsters and scammers," Sen. Myrie said.
If passed, the legislation would define “fraud in connection with an abnormal disruption of the market” in the General Business Law, and would also increase penalties for white-collar crimes not only arising from the pandemic, but from future emergencies and market abnormalities, too.