North Americans lose $500 million to Covid fraud

Americans have lost nearly $500 million to Covid-related scams since the start of the pandemic, according to Federal Trade Commission data running from April 2020 to mid-July this year.

Around 327,000 people filed a fraud complaint linked to the Covid pandemic, with most scams resulting from online shopping and travel.

Advance monthly payments of the new Biden administration child tax credit, which will commence in mid-July, also pose a new scam risk, according to the Commission.

The agency is warning that con artists will likely try to take advantage of families who expect to get monthly payments from the child tax credit. 

US victims of COVID-related fraud scams are estimated to have lost a combined $488 million, with those aged over 65 suffering the largest financial losses relative to other age groups.

A scandal in the making

Sources close to the EU’s Economic Affairs Directorate, speaking on condition of anonymity, have said that EU governments are bracing themselves for similar – or worse – news of rising fraud during COVID.

In particular, the misappropriation of government funds by criminals claiming to be small businesses seeking government help in paying the wages of furloughed staff is expected to be a source of serious losses. 

PCM SAYS: 

While governments across the developed world can be proud of many elements of their COVID response, watch out for this story to develop in what could become one of the biggest scandals to hit the payments sector in many decades.

Commentators have been quick to praise the speed and agility of national payment systems in getting money to small businesses and individuals – but as yet no mention has been made of the amount of fraud that’s been happening.

This statement from the Federal Trade Commission is the first time a government body has recognised and quantified the spike in fraud during the pandemic: anecdotal evidence from our sources in national and supra-national bodies says there is much more to come – especially relating to governments being defrauded of COVID relief funds.