COVID-19 Scams Target The Business Community

With a second Paycheck Protection Program (PPP) on the way, small businesses have yet another chance to secure much-needed financial relief. But new concerns are mounting over the U.S. government’s inability to curb the risk of fraud that emerged during the first round of PPP funding.

Reports in The Wall Street Journal said the latest pandemic relief package allocates $284 billion in PPP loans for small businesses. Yet the new bill fails to address the gaps that allowed for fraudulent activity among some businesses that had secured PPP loans in the first round of stimulus, the publication alleges.

According to the WSJ, nearly 1,500 firms are facing allegations of fraud after receiving a combined $2 billion in federal stimulus aid, while an additional 432 companies are said to have laid off staff after receiving their PPP loans.

While it may be the most high-profile business fraud story today, it’s certainly not the only pandemic-related business fraud threat. This week’s B2B Data Digest takes a look at the numbers behind the latest instances of fraud, including fraudulent invoices, corporate tax scams and more.

$19 million in shipping scams hit Amazon, according to U.S. Homeland Security investigators. Reports in Boss Hunting said two brothers based in New York are accused of committing fraud with the eCommerce conglomerate by posing as a legitimate B2B wholesaler. Amazon produces goods from its vendors, who must agree to adhere to purchase orders that list the product identification number, number of units and price per unit. According to the allegations, the brothers shipped, invoiced and received payment for products Amazon never agreed to procure by switching the product identification number and other details on the purchase order after it had been confirmed with Amazon. For example, in one case, the brothers allegedly changed the PO number of units from less than 100 to 10,000, allowing them to over-bill for the fake order.

$500,000 or more in fines may be issued to a Massachusetts woman who pleaded guilty to taking part in a BEC scam, according to a press release by the U.S. Department of Justice. The individual is accused of conspiring to open bank accounts in the state for fraudulent companies in order to perpetuate the business email compromise (BEC) scam, which involves issuing fake invoices to companies’ accounts payable departments. The individual pleaded guilty to wire fraud and money laundering conspiracy.

$270,000 worth of falsified invoices landed an 11-year ban for one U.K. business director, reports in Euro Weekly News said. According to the publication, the individual is accused of issuing fraudulent invoices from legitimate suppliers in order to secure tax repayments for the company. He allegedly filed tax returns for tens of thousands of dollars, using these invoices to support the filings. An investigation discovered that, while the suppliers were real companies, the invoices supposedly issued by them were fraudulent.

$250,000 in loan offerings are appearing in a new COVID-19 scam targeting small businesses, the U.S. Federal Trade Commission has warned. Reports in ABC 7 Chicago said the FTC is notifying small business owners about the threat of an email scam, with messages issued to businesses claiming to be from the Small Business Administration Office of Disaster Assistance. Taking advantage of market uncertainty and the emergence of new, legitimate SMB loan initiatives, the scammers claim that firms are eligible for loans of up to $250,000, requesting business owner information including Social Security numbers.

215 individuals have been arrested in the last two months over invoice fraud in India, reports from Big News Network revealed. The Directorate General of GST Intelligence and the CGST Commissionerates are collaborating to combat GST invoice fraud. These scams can be carried out in a variety of ways, but one common strategy is to establish a false business, issue fraudulent invoices without providing goods or services listed on the bill, and then collect accrued input tax credit (ITC). According to reports, those arrested include CEOs, accountants and managing directors, with a total of more than 6,600 fraudulent entities unearthed in government investigations.



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