How to Identify and Avoid COVID-19-Related Fraud

Investment Scams

Fraudsters are currently using social media and other internet-based platforms to promote certain legitimate stocks using false claims that align with current news.

For example:

• claiming a certain company’s products or services help to stop the spread of COVID-19
• announcing that a company is getting ready to launch much needed tests

In both instances, the fraudsters are trying to lure investors to purchase the company’s stock and drive up the share price. If they are successful, they sell, or “dump”, their shares at a profit often causing the stock price to drop and investors lose a majority of their investment. According to the SEC, microcap stocks are the most vulnerable to this type of investment scam as these companies are small, their stock prices are low, and there is usually limited information about their management team, products, services and finances.

Some individuals or businesses may not be entitled to the emergency assistance they are applying for. According to FinCEN, some possible signs of benefits fraud include:

• Deposits of multiple emergency assistance checks or electronic funds transfers into the same bank account, particularly when the amounts of the checks are the same or approximately the same;
• Cashing of multiple emergency assistance checks by the same individual;
• Deposits of one or more emergency assistance checks, when the accountholder is a retail business and the payee/endorser is an individual other than the accountholder; and
• Opening of a new account with an emergency assistance check, where the name of the potential accountholder is different from that of the depositor of the check.

Donors contribute funds to charities for specific causes or purposes. Criminals fraudulently solicit contributions for their own personal gain rather than directing funds to where donors intended. FinCEN provides some ways to identify charities fraud:

• Payee organization’s name is similar to, but not exactly the same as, those of reputable charities;
• Money transfer services are used for charitable collections, which are not generally used by legitimate charities; or
• Donations are accepted through websites ending in “.com” or “.net”, while most legitimate charities’ websites end in “.org”.