A Colorado company accused of price gouging and labeling masks and respirators with misleading information has reached a settlement with the state attorney general’s office.
Nationwide Medical Supply Inc., based in Denver, agreed Monday to pay $70,000 to the state and stop charging excessively for its personal protective equipment products. The company also agreed in the settlement to stop making misleading claims that its masks and respirators are more effective than they are.
“We must hold irresponsible businesses accountable for deceptive practices, especially those that have the potential to cause direct harm to consumers,” Colorado Attorney General Phil Weiser said in a written statement Monday.
The company formed in April and built a website to sell personal protective equipment, including masks and respirators, that were purchased from other companies. The owner, Jon C. Lewis, had no prior experience in the medical supply industry, according to the settlement.
When the state tested two of the masks sold on the site for their efficacy, one filtered the advertised 95% of particles; the other caught just 70%.
Marketing for the masks was deceiving, according to the attorney general’s office. The company labeled a KN95 mask as an N95 respirator and claimed that both its KN95 masks and N95 respirators were FDA approved, using the agency’s logo without receiving approval.
Lewis also marketed his products on social media as U.S.-made and certified by the National Institute of Occupational Safety and Health. The company did not manufacture equipment and its products were not NIOSH-certified, according to the settlement.
Nationwide denies the allegations, according to attorney Alan Schindler.
“Even if true, the allegations establish only that Nationwide reproduced information provided to them, and did not intentionally mislead the public,” Schindler said in a written statement.
The settlement follows a bill passed by the state legislature last year that prohibits price gouging during a public health emergency or other disaster.
Nationwide sold products at more than a 250% markup compared to the cost of buying them from third party manufacturers, according to the attorney general’s office, violating the 2020 law. The company even offered a commission to its salespeople — who were told to negotiate for prices — if they sold to customers in the medical industry or government.
UPDATED: This story was updated Jan. 25, 2021 at 1:16 p.m. with a statement from Nationwide’s attorney, and to clarify that the settlement was negotiated after an investigation.