CHLA Lodging News July/August 2020

www.calodging.com July/August 2020 17 Avoiding Fraud in the PPE Market AS WITH ANY SITUATION WHERE demand for a product skyrockets, unscrupulous businesses have infiltrated the market for Personal Protective Equipment (PPE) and are supplying individuals, businesses, and even states with disingenuous products. In some cases, defects in these substandard products can put your staff and guests at risk. As you continue your search to acquire personal protective equipment for your employees, there are some key criteria you should keep in mind. If It Seems Too Good to Be True, It Probably Is Demand for PPE has reached unprecedented levels and companies around the world are working overtime to increase the supply; however, there are still limits to what can be produced. For example, 3M, one of the largest mask producers in the world, is investing in production lines to double their capacity of 1.1 billion masks/per year. Recently, 3M was approached by an individual who sought to buy 900 billion N95 masks and claimed they were for charity. When the sale was denied, the individual used names of 3M employees they had obtained during their negotiations to present himself as a 3M distributor. Despite failing to acquire any 3M masks, the individual is believed to have made sales to businesses across the country. If a supplier claims to have a near unlimited supply of PPE, take some time to verify their claims. Verify the Manufacturer and Supplier Over the past several months, businesses, and even the State of California, have run into trouble during the PPE procurement process because they fail to confirm the authenticity of their suppliers. In the case of the State, officials signed a multi-million dollar contract with a two-day-old company which was only stopped by bank officials. In the case of the 3M fraudster, a business which was contemplating a contract for the absent 3M masks became suspicious and contacted 3M’s fraud hotline. If you have any questions as to the authenticity of a product or supplier, contact the manufacturer to confirm that the supplier is valid and has access to the offered goods. Check the Price and Manufacturer Under state law, businesses cannot significantly raise the price of a good or service during an emergency declaration unless their underlying costs increase at a commensurate rate. Despite making significant investments into their infrastructure and supply chains, manufacturers are working to avoid significant price increases. For example, a single N95 mask typically still sells directly from the manufacturer for around $1.27–$3. Despite the low costs, unscrupulous merchants are selling counterfeit products for upwards of $23 per mask. Despite the active monitoring of sites such as Amazon, many suppliers are still slipping through to the marketplace. Since the start of the outbreak, Amazon has removed over 500,000 pandemic-related listings due to price gouging or counterfeit products and 3M has filed lawsuits against over a dozen businesses for misrepresentation of the product and price gouging.  No matter what PPE you are purchasing, make sure that you are protecting your staff, guests, and your business. Stay safe, verify your suppliers.