The Federal Trade Commission won victories in two lawsuits against companies, that failed to deliver on orders of personal protective equipment in the early stages of the COVID-19 pandemic. In separate actions against QYK Brands (doing business as Glowyy and through related companies) and American Screening, LLC, the Commission alleged that both companies deceived consumers about the availability of PPE gear at the onset of the COVID-19 pandemic. Commission staff won both actions on summary judgment, holding these companies accountable for their misconduct in the early days of the pandemic and putting more than $17.6 million back into consumers’ pockets.
Both California-based Glowyy and Louisiana-based American Screening marketed and sold personal protective equipment in the early days of the COVID-19 pandemic, including masks, face shields, hand sanitizer, and gowns. American Screening marketed its products in bulk and, in addition to advertising to individual consumers, targeted local governments, hospitals and nursing homes for sales, while the Glowyy defendants marketed their products to individual consumers. Both companies made false promises about the availability of PPE, resulting in consumers who waited weeks or even months for their orders to be fulfilled, if at all. In addition, the Glowyy defendants misled consumers by marketing a supposed protein powder that they claimed could prevent COVID-19.
In its order granting summary judgment in favor of the Commission in Glowyy, the court found that the Glowyy defendants began advertising hand sanitizer and other Personal Protective Equipment (PPE) products online in March 2020 saying they were in stock and would ship the same day they were ordered, but defendants repeatedly failed to make good on those promises. The court also found the defendants not only failed to actually ship the product for weeks or months, but they failed to offer refunds to consumers or allow them to consent to the delay as required by the Mail Order Rule.
In the American Screening matter, the court’s summary judgment order found that at the start of the COVID-19 pandemic, American Screening’s website claimed that items would be shipped “within 24-48 hours” and that products were “in stock” and available to ship. However, American Screening did not have a reasonable basis for its shipping claims, failed to ship many orders within the promised time period, and did not follow the Mail Order Rule’s requirements for delayed shipments.
Since the earliest days of the pandemic, the FTC has acted to protect consumers from unscrupulous actors who have sought to use the pandemic as a tool to scam consumers, governments, and businesses. The FTC brought cases against the Glowyy defendants and American Screening in federal court in August of 2020 using its authority under the FTC Act and the Mail, Internet and Telephone Order Rule. In recent cases, the Commission has used its authority under the COVID-19 Consumer Protection Act, passed in 2021, to target scammers preying on pandemic fears.
In Glowyy, the court has already entered a permanent injunction following the Commission’s summary judgment win. The injunction requires Glowyy to:
- Stop selling products that purport to treat COVID-19. The order prohibits the Glowyy defendants from selling or marketing any good or service that claims to prevent, treat, or protect against COVID-19 or any other infection or disease.
- Stop misleading consumers about the timing of product deliveries. The order requires the company ship products in a timely manner, offer a refund if they are unable to do so, among other things. The company must create and maintain records demonstrating its compliance with these requirements
- Stop making unsubstantiated health claims. The order prohibits Glowyy from making unsubstantiated health claims about any dietary supplement, food or drug.
- Provide refunds to consumers. Glowyy must surrender $3.08 million to the FTC to be used for providing to refunds to consumers.
In American Screening, the court agreed with the Commission that both monetary relief in excess of $14 million and injunctive relief are appropriate in this matter. Commission staff will submit a proposed order finalizing that relief in the coming weeks.
The FTC’s case against QYK Brands, doing business as Glowyy; Dr. J’s Natural, LLC; EASII, Inc., Theo Pharmaceuticals, Inc., Rakesh Tammabattula; and Jacqueline Thao Nguyen was filed in the U.S. District Court for the Central District of California, and its case against American Screening, LLC, Ron Kilgarlin Jr., and Shawn Kilgarlin was filed in the U.S. District Court for the Eastern District of Missouri.