Fraud in Times of Crisis

Apr 06, 2020

Fraud always increases in times of crisis. The threat of Coronavirus has people worried about not only their health but also their finances. As more states issue stay at home orders and many find themselves out of work for the foreseeable future, uncertainty is on the rise. Scammers take advantage of the confusion to prey upon the vulnerable. The FBI has issued a warning that scams related to the Coronavirus are on the rise. While some of the scams are unique to the current crisis, many are recycled versions of prior schemes or updates to existing schemes, most of which target personal information. The Great Recession saw a spike in such schemes and, as Coronavirus related unemployment rises, they are likely to resurface. As identity theft scams become more common, state revenue departments and unemployment agencies will need to be on the lookout for fraudulent returns and claims that utilize stolen information.

ID Theft is always a concern for tax organizations. However, in uncertain times, scammers take advantage of people’s anxieties to gain access to their personal information. The Great Recession saw an uptick in jobs scams that exploited people’s difficulties in finding work. Scammers posed as legitimate companies, posting applications as companies promising high wages and flexibility. Then, as part of either the application or supposed “on-boarding” process, they asked job seekers for personal information such as social security numbers or banking information. One such scammer even managed to collect tax documents from their victims. The jobs never materialize, and then fraudsters use this information to open fraudulent bank accounts, file for tax refunds, or claim government benefits on behalf of the unsuspecting victim.

Another form of fraud that trends upward during economic downturns is family fraud. In desperate times, people are willing to take advantage of their family and friends. Some will steal personal information from their loved ones for the purposes of opening credit cards or claiming government benefits. During the Great Recession, there were cases of unemployment insurance fraud where people claimed unemployment benefits for dead relatives. With the unprecedented increase in unemployment claims due to coronavirus related job losses, and the additional incentive created by the increase in unemployment income with the stimulus, unemployment fraud is likely to surge.

Fraud and identity theft rise in times of crisis as unscrupulous individuals exploit people’s insecurity. As governments try to help people through trying times, revenue departments and unemployment agencies need to stay on top of scams to keep criminals from taking unfair advantage of aid meant for others. Advanced analytics can help government agencies weed out fraud and keep scammers from profiting off the worry of others.

Look for our next post where we will outline the importance of using data analytics to help predict, prepare for, and prevent fraud during these volatile times. Contact us for more information on how we can help your organization fight fraud.