The COVID-19 pandemic has seen a dramatic increase in counterfeit products and fraudulent retail transactions across the globe. In business-to-business markets, employers are getting scammed by fraudsters who successfully peddle counterfeit PPE equipment and face masks. Entire hospitals and medical facilities were duped into purchasing sub-par PPE, among other similar scenarios that impact consumers of all types.
For decades, transnational criminal organizations have used counterfeit products as a means to generate funds and launder money to fund countless illicit and often violent activities throughout the world. Let’s consider the illegal trade of cigarettes, for example. While only one type of revenue stream, illicit cigarette trafficking or intellectual property theft used to counterfeit premium brands in foreign markets, all feed into the same ‘pot’ of money. Criminal non-state actors could use those monies to carry out continuous illicit market activities or even fund terrorism activities in certain countries.
I naturally refer to these challenges as theoretical examples for the sake of this column. I digress, though. There’s a lot of supporting documentation showing the dynamic interconnectedness of illicit trade. Whether it’s cigarettes or not, the shares of these revenues are multipurpose and multinational. Earlier this month, InsideSources.com held a webinar with federal law enforcement officials, academics, and the chief of illicit trade prevention for tobacco giant Philip Morris International (PMI). I asked Hernan Albamonte, PMI’s head of criminal trade prevention (who was the presenting host of the webinar), what he thought about the connections between the illicit tobacco trade and other adjacent issues like illicit, counterfeit, and contaminated vaping products that contain nicotine or THC.
“The most relevant thing here is to make sure that the market is regulated and enforced by the FDA,” responds Albamonte to my query. He adds that “[Counterfeiters] will pour into those things (illicit activities)” and that illicit market groups will use these avenues, like countless others, to capitalize on regulatory uncertainty. Albamonte previously announced a new partnership with the Department of Homeland Security to improve the private-public collaboration in countering illicit and counterfeit trafficking of tobacco and other products.
In 2020, Inside Sources also held a similar webinar with Albamonte. At the time, the shortage of PPE was fraught as the federal government responded slowly to address the COVID-19 crisis in its earlier stages. Albamonte said at the time that cigarette smuggling is a wide-ranging problem and is a lucrative crime. As mentioned, these monies serve as potential revenue streams for terrorist groups and highly developed criminal networks that span borders.
“The same criminals who traffic in weapons, exotic animals, and even people, profit massively from illegal tobacco —and the consequences are dire,” Albamonte said during the 2020 webinar. He also referred to an interagency report from the U.S. government, which concluded that illicit tobacco and cigarette trafficking threaten national security.
The Centers for Disease Control and Prevention (CDC) had a “dress rehearsal” for the COVID-19 pandemic during the 2019 cases of the deadly but rare e-cigarette and vaping-related lung injury. Also referred to as EVALI, the injury’s non-communicable outbreak resulted in an unprecedented and ongoing regulatory crackdown on electronic cigarettes at the federal and state levels. Due to the broad push to ban or tightly restrict product access, there could be a spike in the illicit trade of e-cigarettes and vape liquids. All of this said, the same criminal networks that continue to smuggle and distribute illegal tobacco products are still being used to perpetuate instances of medical and personal protective equipment fraud.
Even with a new president and the distribution of FDA-approved vaccines, PPE fraud is still rampant. As Albamonte, and other experts like him, have described, fraud is a persistent enterprise that some are making millions of dollars off of during times of crisis and scarcity.