For the last year, many companies and businesses have been charging fees to cover COVID-19-related health and cleaning services. Those fees can range from $5 for disinfectant in a hair salon to up to $1200 for cleaning and food in senior-living centers. Many consumers do not become aware of the fees until they receive their bill. They are not being informed ahead of time of these charges.

According to the Washington Post, some of these charges may constitute fraud, making those fees illegal. The Washington Post conducted a survey of attorney general offices and financial departments across the country. The newspaper found that over 500 complaints of improper surcharges have been filed against senior care facilities, restaurants, dental offices, and hair salons.

States and territories vary as to what charges are permissible. Some states allow the charges. Others authorize refunds to the patients and customers who are unfairly charged for personal protective equipment and other safety measures. Some insurance companies also cover the additional safety costs while others don’t.

In one example, “Michigan Attorney General Dana Nessel (D) sent a cease-and-desist letter to 11 senior living facilities in August after 45 residents reported being charged $900 each in ‘supplemental COVID-19 fees.’” According to Ms. Nessel, the pandemic doesn’t give the companies the right to charge unauthorized costs to clients and customers.

Advocates for the businesses, such as Sean Kennedy, VP for public affairs for the National Restaurant Association, say that many standard methods (such as tips and gift cards) to raise money for the services aren’t enough to pay the expenses of these health-related services. Advocates say without the surcharges for PPE and improved sanitation, some small businesses would be forced to close. Some businesses, such as restaurants and hair salons, say the occupancy restrictions and other state restrictions during the pandemic make it extra difficult to make a profit – without “creatively” passing on some of the costs to consumers.

Understanding why surcharges may result in criminal fraud charges

Some states are issuing warnings to businesses and insurers that there are consequences for violating consumer protection and insurance laws. In addition to violating the law, businesses that are intentionally trying to deceive their clients and customers in order to charge the client/customers a fee may be opening up their companies to charges of fraud.

It is one thing to be upfront about the charges. Telling people you are charging more for haircuts, meals, or nursing home services before the products or services are delivered is generally acceptable. Telling the people about the charges after they have received the products or services could open you up to charges of fraud.

In Maryland, fraudulent acts may violate a state fraud statute. Defendants may also (or alternatively) be charged with related crimes such as theft.

Attorney Joseph Carey understands the state and federal criminal laws including the laws for fraudulent activities. He asserts all legal and factual defenses on your behalf. To speak with an experienced criminal defense lawyer in and around Bowie and Crofton, call Carey Law Office today. You can schedule an appointment by calling 301-464-2500 or completing our contact form.