Beware of CARES Act fraud
What should small businesses be on the look out for when managing their CARES funds?
With almost $1 trillion in U.S. Small Business Administration CARES funding loaned and granted to struggling businesses across the U.S., it’s unsurprising that some would attempt to capitalize on the largest federal financial assistance bill in history. And while many have attempted to defraud the government, many more are out to take advantage of small business owners. As of June 26, 2020, the SBA reported 692 complaints alleging potential fraud or scams relating to the Paycheck Protection Program and Economic Injury Disaster Loan, including credit inquiries for individuals who had never applied for an economic injury loan or grant – a scary statistic that underscores the breadth of risk faced by unsuspecting small businesses.
So what should small businesses be on the lookout for, and what should you do if you suspect you are being scammed?
Most scammers attempt to contact small business owners via email “phishing” attacks. Under the guise of the U.S. SBA, these emails ask for personally identifiable information, request payment of advanced fees unrelated to the real SBA program, or attempt to install malware disguised as email attachments. These “phishing expeditions” have become more advanced in the last few months as scammers learn more about SBA loan programs and procedures, and target vulnerable populations.
“Fraudsters prey upon those in vulnerable positions, and this is a critical time for our nation’s small businesses,” SBA Office of Inspector General Special Agent in Charge Kevin Kupperbusch said. “SBA OIG and its law enforcement partners are actively working together to root out fraud in SBA’s programs and bring those responsible to justice. The public is encouraged to learn about potential fraud schemes and scams as a safeguard to being victimized.”
According to the SBA, always cross-reference your actual loan application number against the number represented in the email, as well as any information presented from the SBA with the information available on the SBA website. Any email from the SBA will always come from accounts ending in “sba.gov”. Some email providers allow you to verify the sender’s address and access attachment metadata, ensuring that you know exactly what you have received and from where. The presence of an SBA logo in an email or webpage does not guarantee the information is either accurate or endorsed by the SBA.
The SBA does not initiate contact on either 7a or Disaster Assistance loans and grants. If you are contacted by someone promising to get approval of an SBA loan that requires up-front payment or a high interest bridge loan in the interim, you should suspect fraud.
If you have received an unsolicited call, letter, or email and suspect you are being contacted fraudulently, you should never release any private information, including Social Security numbers, credit card or banking information. Then, report the incident by contacting the Better Business Bureau or the Nevada Attorney General.
Fraud and scams are nothing new, but with increasingly complex technological systems and a population seeking help wherever they can get it, the pandemic has presented new opportunities for criminals. By keeping informed on the latest trends and remaining vigilant for any suspicious contacts or activity, you can protect yourself and your assets from those with less-than-altruistic motives.
If your small business needs guidance or assistance, sign-up for no-cost, confidential business advising with the Nevada SBDC.