Windsor (April 23, 2020) – The U.S. medical-gear maker, 3M, filed a lawsuit over deceptive N95 face mask sales and price gouging against the Canadian company, Caonic Systems Inc., in an Ontario Superior Court on April 21. 3M alleges in its lawsuit that the Ontarian company falsely affiliated themselves with the PPE manufacturer. Furthermore, Caonic and its directors, Zhiyu Pu and Harmen Mander, are accused of selling the hard-to-find N95 respirators at more than five times the appropriate retail price during the COVID-19 pandemic. 3M has also taken legal actions against U.S. companies in New York, California, Florida, and Texas over the past weeks to fight fraud, price gouging, and counterfeiting.
The Minnesota based medical-gear maker 3M announced in a press release that they filed a lawsuit in Canada over deceptive N95 face masks online retail sales and price gouging in Superior Court in Ontario on April 21.
Selling face masks for more than five times the appropriate retail price
The lawsuit alleges that Zhiyu Pu and Harmen Mander, the directors of Caonic Systems Inc., registered 3M-Health.com on the Canadian e-commerce platform, Shopify. Therewith, 3M accuses the Ontario company of claiming a phony affiliation with the PPE (Personal Protective Equipment) manufacturer.
Caonic began to sell N95 respirators in March, which are hard-to-find since the COVID-19 pandemic started. According to the lawsuit, they claimed that the face masks originated from 3M certified suppliers in Singapore and the UK.
Furthermore, the lawsuit alleges that the face masks were sold at exorbitant prices; capitalizing on the shortage of equipment during the pandemic. Reportedly, Caonic sold the respirators for $17 each, which is five times the appropriate retail price, according to 3M.
Shopify apparently closed the site at 3M’s request on March 31. However, Caonic Systems opened a second site with Shopify – tormenhealth.com. Even after Shopify shut down the second site, Caonic continued to market the masks on another platform.
Cracking down on price-gouging
3M stated in its press release that they reported the information regarding Caonic’s deceptive sales and price-gouging to the Ontario authorities before filing the legal action.
In the lawsuit, 3M is represented by David L. Campbell and Sunny Rehsi from Bowman and Brooke LLP and requests the court to order Caonic to assist in identifying the location of any remaining respirators as well as sharing sales and customer information. Furthermore, 3M offered to assist in evaluating the face masks’ authenticity. If they are authentic, 3M offered to support returning them for use in efforts to fight COVID-19. If they are not authentic, 3M offered to inform Caonic’s customers and recover the respirators.
The U.S. company announced that they will pursue damages and that they ‘will donate any damages recovered to COVID-19-related nonprofit organizations.’
‘At 3M we are working hard to continue to increase production of respirators for the healthcare workers who need them the most in the fight against COVID-19,’ said Denise Rutherford, 3M Senior Vice President, Corporate Affairs. ‘We are dedicated to putting a stop to those who are trying to cash in on this crisis and have taken legal action when we’ve identified illegal behavior in New York, California, Florida, Texas, and now Canada.’
3M’s fight against fraud, price gouging, and counterfeiting during the COVID-19 pandemic
3M has been cracking down on price-gouging during the COVID-19 pandemic ever since and has filed a series of legal actions in this matter. According to the press release, they are working with law enforcement around the world to fight fraud, price gouging, and counterfeiting. Since April 10, they filed four lawsuits in the U.S. accusing resellers of trying to capitalize on the shortage of respiratory protection equipment.
On April 10, 3M filed a lawsuit against a John Doe defendant for falsely claiming to be a ‘3M Company Trust Account’ in Texas and able to sell millions of 3M-brand N95 respirators at inflated prices to New York City government officials. In California, 3M filed a lawsuit against Utah-based Rx2Live, LLC for an alleged deceptive price gouging scheme against a California-based healthcare provider. The lawsuit asserts that Rx2Live falsely claimed to be a 3M distributor offering millions of N95 respirators at inflated prices.
The third lawsuit filed 3M in New York against an alleged face mask price gouger in New York City accusing them of falsely claiming to be an affiliate of 3M, and offered to sell US$45 million in N95 respirators to New York City government officials at inflated prices. On April 14, 3M launched their legal actions against an Orlando-based defendant that twice attempted to fraudulently sell tens of millions of likely nonexistent 3M N95 face masks at grossly inflated prices to the federal Division of Strategic National Stockpile, all the while falsely affiliating itself with 3M, according to the medical-gear maker.
3M said in the press release that they have not changed the prices they charge for respirators as a result of the COVID-19 outbreak. Furthermore, the company stated that it is working with online retailers and technology companies such as Google, Amazon, and Facebook to identify and remove counterfeiters and price gougers from their sites and refer them to law enforcement authorities.
Marina Burghard writes for Canadian Fraud News about fraud-related cases, whistleblower, jurisdiction, identity theft, consumer protection, etc. – essentially about scams and how to protect yourself against this kind of fraudulent criminal behavior. She holds a Master’s degree in Political Science where her interest in criminology grew. Besides fraud, Marina’s scientific interest lies in terrorism, extremism and how to deal with it as a society.