Page 30 - gs250901

Insights and Expertise

Online healthcare The risk of online pharmacies

and the challenges In early 2024, 52 percent of Americans reported hav-
ing purchased medication from an online pharmacy—a
number that continues to rise (see http://bit.ly/4m0Eicm).
ahead for FIs This demand has spurred fierce competition in the sec-
tor, as traditional pharmacies battle tech-forward startups
for patient dollars. Advertisements, emails, social media
posts and sponsored videos flood online platforms, and
many consumers bargain-hunt for providers offering the
cheapest treatments.

However, some of the most visible, accessible offerings are
also among the most problematic. Scammers and bad ac-
tors are exploiting the high demand and low inventory of
products like GLP-1 weight loss drugs.
For example, soaring demand for GLP-1 drugs in the past
year has driven unsuspecting consumers toward online
providers offering unregulated and fraudulent products.
When access to compounded GLP-1s increased, so did
pathways for harmful products to slip by undetected. By
By Tom Cook mid-November 2024, one branded GLP-1 seller reported
serious health outcomes linked to compounded versions
LegitScript of its product, some fatal.

nline healthcare has surged in popularity, Consumers have reported problems with their online
first catapulted by the COVID-19 pandemic's medicine as well, including one woman whose GLP-1
acceleration of healthcare digitalization, then
O boosted by niche telehealth startups offering medication was actually fast-acting insulin and nearly
killed her, according to Healthcare Packaging.
customized care.
The problem extends to all types of prescription drugs,
While this streamlined approach to obtaining medica- but especially controlled substances. In another tragic
tions and medical advice may be convenient and appeal- case, a woman unknowingly purchased counterfeit oxyco-
ing, the CDC reported that as many as 95 percent of online done laced with fentanyl and methamphetamine from an
pharmacies operate outside of the regulatory framework, online pharmacy that falsely claimed to be FDA-approved
breaking jurisdictional laws, advertising unapproved (see http://bit.ly/45YiOGY). Counterfeit pharmaceuticals
treatments, and even selling counterfeit products. can have deadly consequences, making the need for stron-

ger safeguards and enforcement even more urgent.
With consumer safety at risk, enforcement agencies like
the U.S. Department of Justice have endeavored to combat What lies ahead for payment facilitators
fraud in the telemedicine sector. Recently, the DOJ uncov-
ered a $1.7 billion international telemedicine scheme in- Risk experts expect fraudulent activity to evolve further
volving fraudulent prescription billings from more than this year as bad actors leverage rapid technological ad-
50 pharmacies in the United States, in which fraudsters vancements to circumvent evolving regulations and com-
posed as beneficiaries to trick doctors and installed soft- pliance measures. For FIs facilitating card-not-present
ware that replicated real prescriptions. transactions for healthcare-related businesses, the stakes
are especially high.
However, while enforcement action has disrupted some
operations, these cases highlight cybercriminals' growing Card networks often categorize such transactions as high-
sophistication and their ability to exploit consumers, busi- integrity risk, meaning there is an elevated risk of illegal
nesses, ecommerce platforms and financial institutions activity that can cause consumer harm. These healthcare
(FIs) using advanced strategies and technologies. Tactics merchants, which typically fall into merchant category
like misleading advertisements, AI-generated customer codes 5122 or 5912, require institutions like acquiring
interactions, and counterfeit credentials enable them to banks, payfacs and ISOs to have extra controls in place to
evade detection and deceive consumers. ensure compliance.

FIs that process payments from these merchants are The balance is critical between managing merchant risk
uniquely positioned to safeguard the marketplace and and maintaining a seamless consumer experience. Failure
proactively combat these threats to public health. to implement proactive risk management strategies may

30