The Paycheck Protection Program has provided a lifeline to small businesses across the U.S. Part of the Coronavirus Aid, Relief, and Economic Security (or CARES) Act, and administered by the Small Business Administration, PPP has also drawn the interest of scammers.
“Fraudsters were — and still are — using the SBA loan excitement to defraud businesses and attempt to redirect loan proceeds or obtain non-public information,” said Jeff Taylor, head of Commercial Fraud Forensics for Regions Bank.
Businesses are being targeted primarily through three familiar ways: phone scams, business email compromise, and fraudulent checks. Because of the size of PPP – a program package exceeding $650 billion to date — fraudsters are now becoming even more prevalent in search of the available funds.
“Just like fire, three elements have to exist for success,” Taylor said. “In the case of fraud, it’s confusion, fear and greed. The best advice is the same bottom-line message: slow down, validate and stay safe.”
Keep your business safe by being aware of these examples of fraud involving payment distributions:
- A caller or spoofed email poses as a lender or financial institution, claims your payment is available for processing, and asks for the routing number, account number, or credit card number you would like to use for your deposit.
- A caller or spoofed email poses as a lender or financial institution, apologizes that your business was not originally approved due to the massive volume of applications, but informs you that your business has been approved for a new round of funding. All you have to do is provide your routing number and account number.
- A caller or spoofed email informs you of additional funds that you can access immediately, provided you give your routing number and account number or credit card number.
These scams to obtain private information are for nefarious purposes to obtain private banking info or install malware – or even ransomware – on your computer.
Keep in mind, the SBA does not reach out to anyone to initiate a loan, nor do they ask for information already provided in the application.
Jeff Taylor, head of Commercial Fraud Forensics, Regions Bank
Regions Bank SBA Director Tyrus Sanders added that the first step when receiving a questionable call or email is to get in touch with your bank.
“Get on the phone and verify,” Sanders said. “If you don’t have a relationship with your bank, start one, because otherwise it makes you susceptible to these schemes. The banker will tell you, ‘that’s a scam,’ or ‘that’s a legit program,’ as well as offer other avenues of assistance you might not have been aware of.”
As always, there are fraud-prevention measures to help protect you and your business:
- Prevent and mitigate malware infection by utilizing appropriate back-up and malware detection systems.
- Train employees to be skeptical of emails, attachments and websites they don’t recognize.
- Take time to verify the instructions in an email before acting.
- Protect your personal and private information, and secure your online systems with strong passwords that include letters, numbers and characters.
- Exercise caution when accessing links in emails or websites. Thoroughly investigate the link to help ensure it is legitimate.
“Don’t fall for these scams,” Taylor said. “If anyone asks you for money to process an SBA loan, they are not legitimate. Likewise, an email about an SBA loan that doesn’t come with the ending ‘.gov’ is fake. Keep in mind, the SBA does not reach out to anyone to initiate a loan, nor do they ask for information already provided in the application.”
Want more information?
The SBA’s Office of Inspector General has published a list of possible scams and fraud schemes to raise public awareness: https://www.sba.gov/document/report–sba-programs-scams-fraud-alerts.
Be fraud-aware, and take every opportunity to safeguard yourself and your business. Avoiding fraud means being proactive and focused, but it is worth the effort.