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A recent scheme targets small business owners who received financial aid through the Paycheck Protection Program (PPP) during the COVID-19 pandemic.

Fraud Prevention – PPP Scam

Fraud Prevention: Be Aware of Common PPP Loan Scam Tactics

As a mid-sized business bank, we share a common understanding with our clients regarding the challenges and successes inherent in running a business. One significant challenge we all face is the risk of becoming targets for fraudsters. Staying aware of current scams is one way to help protect your business and be less susceptible to bad actors.

A recent scheme targets small business owners who received financial aid through the Paycheck Protection Program (PPP) during the COVID-19 pandemic. Scammers exploit PPP recipient data to defraud businesses, with one unfortunate incident resulting in a small-business owner losing $11,500 to this deceptive tactic.

At Scale Bank, we helped our clients determine their PPP eligibility and complete the required paperwork, serving as a partner in finding ways to keep their businesses afloat during extremely challenging times. We are also here to work with you and your other financial experts if you have questions about your PPP funds.

The scam

PPP loan details are public, enabling scammers to access information like loan numbers and amounts. The scam begins with a phone call, often claiming to be from law enforcement, alleging fraudulent activity related to the PPP loan application. The caller will provide details to make the call seem legitimate and often follow up with an email, including fake documents and a demand for payment – typically in cryptocurrency. (A request for this form of payment is a red flag on its own!) 

The scammer will create a sense of urgency, making the target feel like they have to act immediately to avoid significant consequences before thoroughly reviewing and reflecting on the materials being provided. Some versions of this scam impersonate various federal agencies, including the Internal Revenue Service (IRS). 

What to watch for if you get a suspicious call or email

Demands for immediate payment, particularly via cryptocurrency.

Unexpected calls, emails or documents from someone
claiming to represent a government agency.

Pressure to respond immediately without time to review the
documents provided and attempts to create a false sense of

Legitimate inquiries will give you time to consult advisors and review paperwork.

To avoid business fraud:

1. Verify Caller Identity: Be cautious of unsolicited calls, especially those claiming to be from law enforcement. Confirm the caller’s identity independently before sharing personal or financial information.

2. Question Specifics: Challenge callers providing specific loan details or demanding immediate action. Genuine authorities typically communicate official information through proper channels, not over the phone.

3. Scrutinize Documents: Carefully inspect emailed documents for inconsistencies or signs of forgery. Verify the legitimacy of documents such as arrest warrants with relevant authorities or legal experts.

4. Exercise Caution with Payments: Avoid urgent payment requests, primarily through unconventional methods like cryptocurrency. Verify payment demands and seek advice from financial advisors or law enforcement if unsure.

5. Stay Informed: Stay updated on scam alerts from government agencies or financial institutions. Educate yourself and your team about common fraud tactics to recognize and avoid scams.

6. Seek Confirmation: When in doubt, seek confirmation from trusted sources or authorities. Contact law enforcement or financial institutions to validate suspicious communications or documents.

At Scale Bank, we are your partner in combating fraud. By remaining vigilant and verifying the authenticity of communications and documents, small business owners can mitigate the risk of falling victim to fraudulent schemes, particularly those targeting PPP recipients and other financial aid programs. If you have questions about your loans, our bankers can help get you the answers you need to feel confident!

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