Red Flags That Your Identity was Used to Apply for a Fraudulent PPP or EIDL Loan
This week we have a guest contributor to our newsletter. Carrie Kerskie is a nationally recognized identity theft, fraud, and cyber threat lecturer, author, and consultant. She is the president of Kerskie Group, LLC, a leader in personalized identity theft restoration and prevention. To learn more visit www.Kerskie.com.
Did you recently receive a letter from the SBA regarding your Paycheck Protection Program “PPP”, or Economic Injury Disaster Loan “EIDL”? If you did and you didn’t apply for either one of these, you could be a victim of PPP or EIDL identity fraud.
If you received a letter from the SBA regarding your PPP or EIDL loan, don’t throw it away. Some people that received these letters thought it was junk mail or a scam and threw it away. It was a warning sign that a fraudulent loan was taken out using their identity, either personal or business.
Let’s look at what these programs are and how the bad guys were able to exploit them for profit.
What are the PPP and EIDL
The PPP is a non-repayable, forgiven loan from the SBA to help businesses retain employees during the COVID crisis. As long as the employer used the funds as required, the loan should be forgiven.
The EIDL was created to help meet the financial needs of struggling businesses that were negatively impacted by COVID. The EIDL, unlike the PPP, must be repaid. If certain criteria were met, the business could refinance the EIDL into a PPP and have the loan forgiven.
Opportunity for Fraud
While these programs were a lifeline for many businesses during the crisis, they also presented an opportunity for fraud. In my opinion, the SBA made some fatal mistakes when rolling out these programs.
Businesses were originally required to apply with their bank. In an attempt to further streamline the approval process, the SBA announced that a business could apply with any financial institution, including virtual (online) banks.
Because PPP loans are forgivable, a credit check was not required. The application process for these SBA loans was streamlined to expedite the approval process.
Where Does the Application Information Come From?
Due to data security breaches, since 2005, over one BILLION personal records were exposed nationwide. The odds of your personal information available for sale online are high.
Did you know that anyone with internet access can purchase a name, date of birth, and SSN for less than $1.00?
Yep, it is that easy.
With this information, the bad guys completed the applications using fictitious businesses, along with fake financial documents. In many of the cases we are aware of, the bad guys used the victim’s first or last name followed by “Farms” as the business name.
Since the victim’s SSN was used, as opposed to a business FEIN, if the victim’s credit was good, the loan was likely to be approved.
Many of the loans we are aware of were for $48,900 or less.
As far as proof of ID, the bad guys applied online with the virtual banks. Most, if not all, require very little information or no information for proof of identity. If a driver’s license was required, bad guys can easily make a fake one. The banks do not confirm the photo on the ID matches the photo in the state’s DMV database.
Fraudulent Applications for Real Businesses
But not all the applications were for fake businesses. We received calls from a few businesses that discovered someone used their business identity to apply for a loan or multiple loans.
In many states, business records are available to the public. For example, in Florida, anyone can search for businesses registered to conduct business in the state by visiting www.sunbiz.org. The information listed for each business often includes the business address, officers, and FEIN, information required on the PPP and EIDL application.
Other Warning Signs
Some of the victims noticed a hard credit inquiry from the SBA on their credit report. The EIDL required a credit check, while the PPP defaulted to the discrepancy of the financial institution.
Some organizations ran credit checks. Some did not.
If you saw an inquiry from the SBA on your credit report, you might be a victim.
If you own a business, check your business credit report. Do you see an inquiry from the SBA? If so, your business might be a victim.
If you received a letter from the SBA regarding a fraudulent PPP or EIDL loan, contact the financial institution where the loan was approved and the SBA.
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You can also attend my upcoming webinar with Ciccarelli Advisory Services on Thursday, March 11, 2021, at 4 PM EST where I will be discussing protecting your assets from pandemic scams and threats. You can CLICK HERE to register for the webinar.
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