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The Ghosts of Stimulus Fraud Still Haunt Us
Frank McKenna
May 23, 2023
Hello from FrankonFraud,
Summer’s almost here, and it’s heating up. Do you know what else is heating up? Fraud.
Some of the big stories of the week;
The GAO found that 1 in 3 PPP loans contained fraud flags
The IRS reported flagging over 1 million identity theft attempts
An OTP Bot mastermind was jailed in the UK
Fraudsters wrecked US national unemployment rates
And customers of Natwest are pissed about fraud controls
Let’s get to the top stories of the week!
Hot Mess - There’s Even More PPP Fraud Than We Originally Thought
By all indications, the PPP and EIDL programs were a hot mess of fraud. But a new report by the GAO found that it might be even bigger than we even suspected.
They analyzed over 13.4 million loans and compared what the businesses had stated against what those businesses are required to report to The National Directory of New Hires and found that close to one in every three businesses might have misrepresented information on their applications.
From non-existent businesses to wildly inflated claims about wages and employees, the PPP and EIDL programs were a hot mess of fraud.
Sentilink Uses PPP Data To Identify Bank Account and Check Fraud Risk
Max Blumenfield of Sentilink posted an interesting piece this week, “Why We Added PPP Loan Data To Our Fraud Investigation Tool.
Using this publically available PPP loan level data, they matched the names and addresses from PPP loans into Manifest - Sentilink’s proprietary organized view of consumer identities.
Fraud investigators subsequently reviewed loans submitted by high-risk lenders that were called out in the White House report on PPP fraud - We’re Not The Police (Womply and Blue Acorn were two such lenders). They found that many of the loans submitted to high-risk lenders did not have any proof that the businesses existed.
And perhaps most interesting of all, when they examined check fraud cases at banks, they found that 13% of the check fraud occurred on accounts where the account holder had received a loan from a high-risk lender during COVID. That was approximately four times higher than the general population.
And they are onto something here. At Point Predictive, we also looked at the link between high-risk PPP activity and subsequent fraud in auto lending. We found that 76% of synthetic identity auto loans out of Chicago could be tied back to suspicious EIDL loans that prior year.
The IRS Flagged 1 Million Tax Returns For Identity Theft, But This Stat Will Surprise You
There was lots of buzz around the news that the IRS had flagged over 1 million tax returns for identity theft.
I dug around into that stat a bit, and I found out some surprising things about that number that might surprise you too.
OTP Bot MasterMind Targeted 200,000 Victims and Lived The Luxe Life
If you think OTP Bots are the scourge of the earth, then you will be happy to know that one of the original masterminds behind the tech is behind bars.
Tejay Fletcher was the mastermind behind iSpoof.com, a website that sold the ability for scammers to pretend they were calling from customers’ banks to steal their one-time passcodes.
This website posed as a “one-stop spoofing shop” for criminals, who used it to make fake bank phone calls and steal tens of millions of pounds from innocent Britons. In total, it is estimated that over 200,000 potential victims were targeted.
Fraudsters Wreck US National Unemployment Rates
If you thought we left unemployment fraud in the rearview mirror with COVID. Think again.
A new surge in unemployment fraud claims in Massachusettes is so high that it is reportedly distorting national unemployment stats. The state has been battling against takeover fraudsters and identity thieves to the point where it is now having an impact nationally.
In Washington, It’s Stupidly Easy To Duplicate Someone’s Drivers License
In Washington, Rob Graham is missing work because he’s at his new job: working to get his stolen identity back.
Rob’s identity was stolen when his Washington State Driver’s License was duplicated thru the Department of Licensing website. The scammers in the state only needed to type in his name, address, and Social Security number on the DMV website and provide a fake email address to have his real driver’s license sent to them.
They were able to create a perfect fake license with his real information bypassing all the security checks.
NatWest Post Fraud Warnings At Branches And Customers Are Seething Mad
Over the weekend, Natwest customers of the bank were confronted with this notice when they went to the ATM machines.
On Reddit, there were hundreds of angry posts by customers who felt the banks were being far too controlling with their own money and felt the bank was overreaching.
Some felt the banks were invading their privacy and using fraud as an excuse to surveil how they planned on using their own money. Others felt that the bank was trying to avoid being victims of a run on the bank such as what happened here in the US.
Customers are on edge after Natwest had a glitch in March which left them unable to make transfers or do cash withdrawals.
But Natwest was simply trying to protect customers who are increasingly becoming victims of scams. By asking questions, Natwest is hoping to help consumers become victims of “grandparent” or “hi mom” scams that are sweeping through the UK.
Banks really can’t win when it comes to scams, even when they try to help customers.
Freeze Switches Are Creating A Boom In Fraudulent Odometer Tampering
A new technology called “Freeze Switches” are emerging online that blocks or can even slow down odometer readings.
A website which is called SuperKilometerFilter.com offers devices that can be installed on your car, which essentially interfere with the odometer meter in cars and makes it look like you have driven far less miles than you actually have.
The company, which is based in Germany, sells devices for many cars, and the price for the device can range anywhere from $300 to $500 apiece.
The company advises its devices offer “untraceable performance” and can be controlled via a mobile application on your phone to start blocking miles at any time.
This device is being used for all types of nefarious purposes, from odometer fraud to leasing fraud to insurance fraud, and it has huge ramifications to the auto and insurance industries.
Inscribe Report - Document Fraud Has Soared 300%
A recent report by Inscribe, The 2023 Document Fraud Report, found that the number of fake document templates detected last year soared by 300% as more people turned to fakery to get loans approved.
Even worse? The human eye can only detect about 10% of those forgeries, so 90% of those document templates circulating online could be slipping through the cracks undetected, leaving banks with a false sense of security.
Now Here Is Something Cool - Unit 21’s Fraud Fighter Manual 🥊
I saw a pretty hefty copy of Unit 21’s newly created Fraud Fighter Manual on a video, and it looks like a pretty nice resource for crime fighters.
The book covers all the latest fraud trends, including synthetic identity, crypto fraud, account takeover, and more, while providing practical instructions in fraud prevention and risk operations. Best of all? It’s written by fraud fighters from Brex, Mercury, and Lithic. And even better… it’s free!
Auto Lenders - This Is The Biggest Auto Loan Fraud Event Of The Year
You could say I am somewhat of an Auto Loan Fraud junkie, and I even started a company with my business partner Tim Grace to tackle the $8 billion-a-year problem.
On June 6th in Plano, Texas, we are holding our annual Auto Lending Fraud Roundtable, which is an exclusive event for banks and auto lending executives to get together and collaborate.
We have some amazing speakers David Maimon of the CyberSecurity Research Center, Sgt Darren Schlosser of the Houston Police, David Navarro of the California Highway Patrol, Matt Beardsley of PenFed and other speakers from Crescent Bank, Flagship, and some special surprise guests to be announced!
Thanks for reading my weekly newsletter. I hope you have a positive and successful week fighting fraud.