By Peter Mastrantuono
The coronavirus pandemic not only changed the way Americans live and work, but it ushered in new and more sophisticated financial scams aimed at both individuals and small businesses.
While individuals may think they are too savvy to fall for these scams, many are discovering that they have been victimized only after the damage is already done.
Anatomy of COVID-19 Era Scams
Government assistance payments to individuals in the form of stimulus checks and to businesses in the form of loans from the Paycheck Protection Program and the Economic Injury Disaster Loan program proved to be an unparalleled opportunity for online fraudsters.
One of the fastest growing scams involves synthetic identity fraud. Synthetic identity fraud is when a criminal creates an identity instead of stealing an existing one. A synthetic identity uses real (stolen) information (e.g., Social Security Number) and combines it with false information (e.g., date of birth, home address) to create a new identity. With this identity, scam artists can file tax returns, establish a line of credit, open up financial accounts and even obtain a Payroll Protection Program (PPP) loan.
According to CNBC, fraudsters have used real business owners’ personal information to apply for PPP loans and laundered the money through online investment platforms, such as Robinhood, Fidelity and TD Ameritrade. Many experts believe that the true scope of PPP fraud won’t be known until business owners discover they have to pay back PPP loans that they never knew existed.
It’s not just business owners that need to be alert to fraud. A U.S. Treasury Department’s Financial Crimes Enforcement Network advisory in February 2021 elaborated the myriad ways that economic assistance payments to individuals have become fertile grounds for criminal actors.
Protecting Yourself and Your Business from Fraud
There are several key ways to protect yourself and your business from the financial harm of a stolen identity, including:
Monitoring Your Credit Reports: Individuals can do this for their personal credit and for any business they may own. Via AnnualCreditReport.com, you can receive one free credit report annually from the major credit-reporting agencies, without impacting your credit rating. By requesting a report every four months from a different agency, you can keep track of your activity on a regular basis. Better yet, each agency, Experian, TransUnion and Equifax, are offering free weekly online reports through April 2022. Business owners can use Experian, Equifax and Dun & Bradstreet to track their credit status.
Reviewing Your Annual Social Security Statement: Fraudsters may use your social security number to obtain employment, which would show up as income on your statement. If the income doesn’t align with what you know it to be, contact the Social Security Administration.
Subscribing to an Identity Protection Service: Identity protection providers can help detect and notify you of threats to your identity, alert you when loan applications are made in your name and even help protect your personal information from being stolen from your computer and phone.
Looking for Mail Addressed to Another Name: Receiving mail at your home or business address in another name may indicate that your personal identity was stolen.
Ignoring Unsolicited Texts, Calls or Emails: The government will not contact you to verify personal information. Avoid scams that include high-pressure tactics or “processing fees.” If you do receive a call from a government agency, call them back on a number that is listed on that agency’s official site.
Peter Mastrantuono is a contributing writer to MyPerfectFinancialAdvisor, the premier matchmaker between investors and advisors. Peter worked for over 30 years in the wealth management industry, focusing on retirement planning, investing, asset allocation and financial planning.