The Fraud Examiner
On the Radar: COVID-19 Stimulus Fraud
Ron Cresswell, J.D., CFE
Research Specialist, Association of Certified Fraud Examiners
In late March, the U.S. Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to provide economic assistance to American workers and businesses during the COVID-19 pandemic. The CARES Act authorizes direct Economic Impact
Payments (EIP) of up to $1,200 for individuals and $3,400 for families. The Act also created the Paycheck Protection Program (PPP), which provides low-interest loans to small businesses for the purpose of paying payroll costs and other business expenses.
As an incentive to keep workers on the payroll, PPP loans may be partially or fully forgiven if the business retains or rehires its employees at pre-virus wages.
At a cost of over $2 trillion, the CARES Act is the largest economic stimulus package in U.S. history. Other countries have adopted similarly massive stimulus packages, including Germany ($189 billion), China ($169 billion), Canada ($145 billion), Australia
($133 billion) and many others.
As fraud examiners know, fraudsters see opportunity in crisis. Therefore, it is no surprise that fraud schemes have proliferated during the COVID-19 pandemic. Scams targeting consumers and organizations are emerging around the world, but with all the
money provided in the CARES Act, it provides a uniquely fertile ground for fraudsters to exploit.
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