According to the FBI, crooks are using the COVID-19 pandemic – including vaccines, variants, and the stimulus funds that flow from it – to perpetrate several varieties of fraud.
One example is the marketing of fraudulent COVID-19 antibody tests for the sole purpose of collecting personal information, which is used for identity theft and insurance-related programs.
Other tactics include fraudulent advertising – through text messages, social media and automated calls – of high-demand supplies such as face masks, test kits and cleansers. With variant strains and renewed mandates for masks, these trends aren’t going away anytime soon. The Federal Communications Commission has issued warnings to many dubious companies and created a website with information on COVID-19 phone scams.
Stock market fraud
The pandemic has also created opportunities for fraud in the stock market. The United States Securities and Exchange Commission recently released warnings to potential investors about fraudulent companies touting products believed to prevent, detect or cure COVID-19. A July 6, 2021, warning for a consulting firm “Earn Cash Quarantine Lending” shows a profit of 300% in 75 days.
Unscrupulous brokers suggest their clients “buy now” before prices skyrocket. With the manipulative “pump and dump” ploy, fraudsters have already accumulated shares of companies, sometimes for pennies on the dollar. The hype then drives up the value of the stock, so that perpetrators can get rid of the stock, causing investors to suffer heavy losses.
Cyber fraud opportunities
According to a March 2021 report by Palo Alto Networks, a cybersecurity company, cybercriminals have registered tens of thousands of coronavirus-related web domains for use in fraudulent ads and phishing attacks. According to the report, the US Department of Justice (DOJ) has shut down hundreds of these sites, which promise relief supplies, protective equipment and vaccines and are often disguised as federal agencies or charities.
A self-proclaimed data expert called “Dustyfresh” updated a daily feed of areas related to false corona, such as “CoronoVirusUpdate.com”. If a victim visited one of the malicious sites, they could start receiving phishing emails to attempt to obtain personal data or install malware to search for private files in order to gain access to passwords and data. personal information for identity theft purposes. Fake sites have imitated advertisements from Pfizer, Moderna and AstraZeneca, promising “free” rewards for providing banking or credit information to cover small “management fees.”
Fraud committed in prison?
In July 2021, a grand jury in Fresno, Calif., Indicted three incarcerated men over a scheme to submit more than $ 1.4 million in fraudulent unemployment insurance claims on behalf of other inmates to California Employment Development. Department. The men were charged with conspiracy to commit postal fraud and aggravated identity theft. Their demands claimed the inmates had worked as clothing retailers, handymen and other jobs before the coronavirus-related layoffs and were available for work (despite being in jail).
The defendants created fake email accounts and used physical mailing addresses scattered across Southern California to avoid detection. Some have paid friends and family up to $ 1,000 each to use their home mailing address.
According to a Report of the Federal Trade Commission (FTC), as of July 26, 2021, they had recorded more than 561,000 consumer complaints related to COVID-19 and stimulus payments. Almost 75% concerned fraud or identity theft. These scams cost consumers $ 505.25 million, with a median fraud loss of $ 373. The tactics of the schemers closely mirror the ever-changing headlines, adapting their methods as new health and economic issues arise around the world.
Stimulation and health fraud
Some states in the US have adopted vaccine lotteries to help people get vaccinated against COVID-19 – with a new surge with variants of the coronavirus. Suspicious calls, texts and emails have been reported offering money in exchange for personal or financial information to speed up access to vaccines. July 2021 FTC alert has warned of a new wave of stimulus scams as the government plans to send child tax credit advance payments to millions of eligible families under the 2021 law on the plan to US $ 1.9 trillion bailout.
The Attorney General’s Office (AG) is working as fast as it can. From 2020 only, the GA has issued a report announcing that the DOJ has negotiated over $ 1.8 billion in healthcare fraud settlements as of fiscal 2020. The DOJ has opened 1,148 healthcare fraud criminal investigations and 1,079 civilian health fraud investigations. According to the report, COVID-19 had significantly extended the risk of fraud to federal health programs.
One example involved billing for unnecessary services, offering COVID-19 testing to Medicare beneficiaries in exchange for personal data, including information about Medicare. In one program, labs targeted retiree communities by offering COVID-19 testing, drawing blood, and billing the government for medically unnecessary services. Other programs involved excessive lab tests, unnecessary breathing tests, allergy testing, and genetic testing.
A telemarketing broker has been indicted over a program to bill Medicare for genetic cancer testing (CGX) and COVID-19 tests that were not eligible for compensation. The broker confessed to how she and her accomplices paid bribes to telemarketers who obtained CGX tests from Medicare beneficiaries who had doctor’s orders authorizing the tests. They would send the completed CGX tests and doctors’ orders to a lab that would then bill Medicare. In return, the broker received bribes from the lab. The fraudulent scheme totaled more than $ 3 million.
COVID-related regimes to watch out for:
- Canned remedies. Since the start of the pandemic, fraudsters have launched false remedies. Although vaccines have been distributed, it is unlikely that the scam aimed at relieving symptoms, immunity, etc.
- Any request to pay out of pocket, or to provide personal information, to receive an injection or to access a vaccine “waiting list”.
- The U.S. Food and Drug Administration has sent warnings to companies selling unapproved products that claim to prevent COVID-19, including teas, essential oils, cannabinol, colloidal silver, and intravenous drug therapy. vitamin C. Sometimes marketed as “defenses” against the pandemic.
- Follow-up checks – beware of calls, texts, or emails claiming to be from federal agencies that ask you to click on a link, pay a fee, or “confirm” personal data such as your Social Security number to speed up a stimulus check.
- Viral programs that promise COVID-19 relief financial “grants” requiring a link click or submission of personal information.
Bad actors will continue to find new ways to use real life events for nefarious ends. Knowing how they work can help reduce the incidence of fraud.
Richard Wickliffe, CPCU, ARM, CLU, ([email protected]) has worked in the insurance industry leading teams of fraud investigators for over 20 years. He is the recipient of the FBI’s Exceptional Service in Public Interest Award and the author of detective novels, where he received the award for best popular fiction by the Florida Book Awards.