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COVID-Related Finance Scams You Need to Be Aware Of

Pandemics, natural disasters, and other tragedies induce varying levels of anxiety and panic in people. Such times bring out the very best and the very worst in human beings. For example, some rise above the stress and challenges and do what they can to make a difference in people’s lives. Yet others, use the darkness that seemingly pervades the world to take advantage of others.

The COVID-19 pandemic and the ensuing economic fallout are providing scammers a near-perfect formula for success, said Susan Grant, director of consumer protection and privacy at the Consumer Federation of America, a research and advocacy organization based in Washington, D.C. “Crooks will dust off old scams, figure out a coronavirus angle and deploy them.”

In March, the advocacy organization National Consumers League (NCL), which operates a project called Fraud.org, warned consumers of the “coming tsunami” of fraud attempts as the pandemic spreads.

“Scammers see this as a golden opportunity,” said John Breyault, NCL vice president of public policy, telecommunications and fraud. The economic downturn has no doubt affected many scammers’ legitimate livelihood, since many of them have day jobs, but unlike those who have lost their jobs but don’t have an illegal side hustle, scammers can now turn their scams into full-time gigs.

Managers and business owners can avoid falling victim to a scam by being aware, first of all, of the scams that are likely going to be perpetrated, and then by educating their employees.

The following are the scams that experts predict employees at banks, credit unions, and financial consulting offices are likely to hear about in the coming months.

“Speed up that economic impact check”

In this scam, the scammer offers to help a taxpayer get their economic impact payment check more quickly. The most likely target will be those who have not given the IRS direct deposit information and therefore will have to wait for a paper check or provide their information in a secure IRS.gov website portal, which is up and running by mid-April. To provide his “service” of expediting economic impact payment (for a fee, naturally), the scammer would need the taxpayer’s account information. And that’s how the taxpayer will never see his check.

“Give the IRS your banking information”

Here the scammer could set up a dummy website disguised as the IRS portal, where users are instructed to provide their direct deposit information. In this scam, taxpayers browsing the Internet could end up on the dummy site instead of the actual IRS site.

“Your account is missing information”

In this scam, scammers will send out letters, e‑mail, or texts that appear to come from the Federal Deposit Insurance Corp. (FDIC), the government agency that insures bank deposits, detailing an urgent update, hence the need for the target’s bank account information. Some scammers have fraudulently used actual FDIC employees’ names in the phony correspondence.

“Invest in a COVID-19 cure”

In this scenario, scammers peddle fake COVID-19 remedies and invite people to invest in them, for huge returns.

A Southern California man was arrested by the FBI in late March, for allegedly soliciting investments in a bogus company that claimed to market pills to prevent COVID-19 and injections to cure those already affected. According to the U.S. Department of Justice, the man’s Instagram video promoting the products had more than a million views in three days.

“Help victims and families”

Not all requests to wire money or otherwise contribute financially to COVID-19 victims and families, posted on social media, are legitimate. And the coming days will likely see an increase in the number of non-legitimate requests.

Other variations

COVID-related scams could involve scammers sending an employee an e‑mail that looks like it is from the manager, requesting money be sent to an organization, e.g., a charity for coronavirus victims. The person in charge of these tasks may not think twice about doing as requested.

Another variation is a fake HRD message advising employees of the need to update their personal information due to a system glitch in our system, and going on to explain that the information is needed for payroll.

What’s your gut saying?

Susan Grant suggests a simple test to determine whether a request is valid: “If you hear that little voice in your head asking, ‘Is this legit?’ you better pay attention to that.”

Stay informed

Stay up-to-date on new scams by checking these reputable websites:

  • Consumer Federation of America
  • National Consumers League
  • Federal Deposit Insurance Corp.
  • Federal Trade Commission
  • Internal Revenue Service
  • U.S. Securities and Exchange Commission

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This article provides general information and shouldn’t be construed as legal or HR advice. Since employment laws may change over time and can vary by location and industry, please consult a lawyer or HR expert for advice specific to your business. You can also contact Payroll Systems to inquire about our HR support services.