Attorney General Phil Weiser's office has reached a settlement with Nationwide Medical Supply Inc., a Denver-based business that made misleading claims about the masks and respirators it sold during the pandemic. The company also charged unreasonably high prices for those masks, which the state described as price gouging.
Weiser's office announced the deal in a press release Monday, saying that Nationwide had agreed to pay $70,000 to the State for making false and misleading claims about the medical and protective supplies it sold. According to the release, those claims included "marketing a KN95 mask as an N95 respirator;" "false claims that a KN95 mask had a '510(k) number for the medical market';" "false claims that an N95 respirator and a KN95 mask were 'FDA/CE approved';" and "use of the FDA logo in violation of applicable law."
The state tested two of the company's masks and found that only one mask reached the 95% filtration level Nationwide advertised. The other mask tested at approximately 70%, as opposed to the advertised 95%.
"Their actions were wrong," Weiser said. "It is not okay for companies to take advantage of buyers who need this equipment by marking it up unreasonably is not okay to tell people that you're selling them something, when it's actually something different. That type of deception is something we don't tolerate. And that's why we're holding them accountable in this action."
The state also claims that Nationwide Medical Supply Inc. gouged prices of the masks, a practice prohibited under House Bill 20-1414, which bans price gouging during public emergencies. The company sold masks for prices that sometimes exceeded 250% the cost of obtaining the masks. The State also found that, in at least one instance, the company allowed salespeople to negotiate prices of the masks with customers, including "Medical and Government" purchasers. Nationwide offered those salespeople a commission if they managed to sell the masks for higher prices.
Nationwide denied the allegations in a statement. The company says it invited the Attorney General's investigators into its offices and provided them with unfettered access to business accounts, as well as documentation regarding Nationwide's sale of personal protective equipment.
"Ultimately, following a months-long investigation, the Attorney General's office alleged that on limited occasions, information published on Nationwide's website regarding certain PPE was not entirely accurate," Jon Lewis, CEO and President of Nationwide said in the statement. "Even if true, the allegations establish only that Nationwide reproduced information provided to them, and did not intentionally mislead the public. Nationwide's goal has and always will be to make PPE available to the general public during the global COVID-19 pandemic, and to ensure that its customers receive the type and quality of PPE required for their intended use."
Nationwide said that rather than spending time and resources fighting the allegations in court, the company will work to improve its internal policies and procedures and to continue to be a trust source of PPR. Lewis added that Nationwide also plans to continue working with the Attorney General's office "to further establish the public's trust."
The $70,000 in settlement money will be used to reimburse the State for costs and attorney fees, payment of restitution and for use in future consumer education. In addition to the $70,000, Nationwide promised to ensure its products -- and the certificates attached to those products -- are authentic. The company also agreed to stop charging "unreasonable" prices during the COVID-19 crisis.
Weiser said people can report suspected fraud or unfair contact to stopfraudcolorado.gov.
"It's really important that people know, when they see deception out there, when they see fraud out there, they can report it," Weiser said. "We are here for people, and your engagement with us helps us protect consumers. We're all in this together."
