Fraudsters Are Preying on the Public with Promises of Government Grants
- Author: Jeffrey Simmons
- Posted: 2023-11-15
The Paycheck Protection Program (PPP) allocated almost $350 billion to be used as loans for small businesses to keep them operating during these challenging economic times. These loans convert to grants at a certain point so long as the business remains operating and pay their employees. The first tranche of money was accounted for in days. Businesses had difficulty applying for this money as there was widespread confusion and little to no guidance given out to the public.
Lack of Guidance Means Vulnerable Small Businesses
These are generally the conditions that scam artists can take advantage of in order to take advantage of the general public. People who are desperate for government assistance without much information are vulnerable when someone comes along offering federal largesse. Scams where people impersonate government agencies are already prevalent in the U.S. as robocalls claiming to be from the Social Security Administration are a frequent danger.
These particular scams now call or email people claiming to be representatives of the Small Business Administration. Even though the PPP requires people to use a financial institution to apply for their loans, many unsuspecting members of the general public do not know that. Like any phishing scam, this robocall or email links people to a form that they should fill out to apply for this purported loan. The form will invariably request personal or financial information such as a social security number or a bank account number. The fraudsters then use the information that they receive to either commit identity fraud or attempt to empty out the victim's bank account.
The Government Will Almost Never Call a Business Out of the Blue
Businesses need to be careful when they have been purportedly contacted on behalf of the government. First of all, the government rarely uses a phone call or an email to contact a person or business out of the blue. This is just not the way that the federal government does business.
In addition, the federal government simply cannot call up one person or business to offer them a grant. They must put out a public notice and allow people to submit a proposal or an application to become eligible for the grant. In other words, the government must have an open application process for every grant program. Moreover, it is rare for these programs to simply be a grant for businesses. Even the PPP is structured as a loan program that could convert to a grant.
When someone calls claiming to be from the federal government, chances are that it is a scam. Federal government operations rarely involve proactively reaching out to and contacting the general public. In other words, when there is a program such as PPP, it is your job to find the federal government as opposed to the other way around.
Moreover, you should be very suspicious of any unsolicited email that you get claiming to be from the federal government. Any government email would be coming to you from an email address with the suffix ".gov." If you get an email from the government that comes to you from a commercial email address, it is a surefire indicator of fraud.
It is on businesses to educate themselves and use sound judgment during this time. They should never give their bank account information in response to a cold solicitation. Before applying to what they think is a government program, they should do their own research on the SBA's website. When in doubt, they can also reach out to the BBB with any questions. In the event that a business receives any communication that it believes is a scam, the best thing to do is to report it to the BBB to make sure that the information can be disseminated to the general public so they can be protected.
