Following passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March, the IRS delivered Economic Impact Payments (EIP) to approximately 160 million taxpayers through direct deposit or physical Treasury checks. The passage of the CARES Act also coincided with massive unemployment, swelling to a civilian unemployment rate of almost 15%, according to the U.S. Bureau of Labor Statistics.
Subsequently, the Treasury Inspector General for Tax Administration (TIGTA) Office of Investigations found criminals engaged in various scams in attempts to intercept Economic Impact Payments (EIPs), or Treasury checks, and/or steal sensitive taxpayer information.
TIGTA warned taxpayers about fraudulent web pages and/or receiving phishing emails, text messages, or social media-based communications asking for sensitive personal information from taxpayers.
U.S. PIRG, the federation of state Public Interest Research Groups, also unveiled the top six scams involving Treasury checks.
Top United States Treasury Scams
Check fraud remains one of the most common types of fraud because it’s easy to execute. Forgery, alterations, and counterfeit checks continue to prevail. This ‘old-school’ tactic is lucrative for fraudsters. A report earlier this year from the American Bankers Association noted that between 2014 and 2016, “check fraud losses saw their first increase since 2008, surging by 28% to $789 million”.
Other well-worn tricks that fraudsters deploy include work-from-home, lottery and contest scams. Victims are also socially engineered to cash fraudulent checks or wire funds to criminals posing as legitimate companies, while an “excess of purchases price” scheme is when criminals “mistakenly” send a consumer a check for more than expected and then ask consumers to wire back the extra cash.
In some instances, fraudsters may shop online and have goods shipped to them, only for the payee to realize that the method of payment, usually a check, hasn’t cleared.
High turnover at branch locations may also present vulnerabilities for financial institutions, as novice tellers fall prey to convincing counterfeit checks.
Top US Treasury Scams
Fake check scams
Scammers sent out phony stimulus checks in the mail to their victims, who deposited them. Then the criminals persuaded victims to send some of the money back, often by wire transfer or gift cards;
Spoofed social media messages
The Better Business Bureau found a rising number of scams offering to pay medical bills for seniors, give out emergency grants, or deliver additional money. Each takes the individual to a spoofed website to steal valuable information;
Fake Social Security number requests
According to the AARP, the Social Security Administration received over 450,000 complaints last year of scammers asking for SSNs. This complaint hotline no doubt got a workout during this pandemic;
Small Business Administration (SBA) loan scams
Government officials alerted the public about potential fraud schemes related to economic stimulus programs provided by the SBA to assist small business owners during the COVID-19 pandemic. The agency advised everyone to watch out for phishing emails or other scams related to economic relief programs;
Fraudsters falsely promised to retrieve payments quicker for a small fee. If a victim submits payment, the fraudster either creates a number of additional fees for the victim to pay or disappears;
Some lenders offered an advance on stimulus money. The catch: recipients pay a high interest rate which can add up quickly, costing them more than it is worth.
Here at AFS, our bank and credit union customers, collectively, have processed over 1 million Treasury items so far this year, compared to some 370,000 items over a similar period in 2019. Troublingly, AFS identified 41,000 of those million items as fraudulent – and were able to put holds on these items.
This has been made possible following new enhancements to TrueChecks® – the industry’s leading check fraud database and comprehensive check fraud prevention solution – including a direct link to the U.S. Department of the Treasury database, giving financial institutions the ability to validate Treasury items in real time or in batch, across their deposit channels.
For more, read AFS’ white paper, Guide to Treasury Check Validation, to learn how financial institutions can easily validate Treasury items.