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Fraud During COVID: Signficant

August 5, 2020

Fraud experts, the U.S. Internal Revenue Service (IRS) and the Government Accountability Office (GAO) are sounding the alarm about fraud in a post-pandemic world. 

The first in a series of benchmarking reports from the Association of Certified Fraud Examiners (ACFE) reveals that CFEs are seeing an increase in a variety of fraud types in the wake of the pandemic. As of May, 68 percent of survey respondents had experienced or observed in increase in fraud levels, and one quarter believe the increase to be significant. Almost all (93 percent) foresee more increases through May 2021. 

Unsurprisingly, cyberfraud tops the list, with respondents citing business email compromise, hacking, ransomware and malware. The next most popular frauds are those by vendors and sellers (price gouging, product misrepresentation, overbilling, etc.), payment fraud and health care fraud. 

The IRS also reminded taxpayers to guard against tax fraud and other related financial schemes related to COVID-19. Since the pandemic began, the IRS Criminal Investigation Division saw a variety of Economic Impact Payment scams, such as stealing the payments or using them as cover to steal personal information. Other schemes include selling fake COVID test kits or treatments, medical supplies and more. Taxpayers could also be duped by fake charities soliciting donations for individuals and groups suffering from the disease.

And a new 400-page GAO report reveals a high fraud risk related to the rapid rollout of the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief and Economic Security (CARES) Act. The GAO cites limited lender review as part of the problem. It recommends the U.S. Small Business Administration develop and implement plans to identify and mitigate risks.

Find more fraud stats from the ACFE in “Fraud in the Wake of COVID-19: Benchmarking Report”. And any COVID-19 scams can be submitted online to the National Center for Disaster Fraud.

Take Action Against Cyberthreats

The pandemic has made data security an even more urgent concern for the profession. Working remotely to such an extreme has opened new potential access points and vulnerabilities hackers can exploit. CPA firms are already prime targets for identity thieves, and these new vulnerabilities can exacerbate the profession's cyber-related challenges. Clever hackers have many ways of exploiting accountants facing tax filing deadlines, especially when firms have outdated software, vulnerable email systems or inattentive employees. As the sophistication of hackers and other cyber criminals increases, so do the types of threats and the number and scope of data breaches. There are ways you can take action NOW. Check out this list from VSCPA preferred provider CAMICO on things you can do, from maintaining work-from-home “cyber hygiene” to powering down.