COVID-19 Financial Fraud And How To Spot It

4th Sep 2020
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Businesses are grappling with the repercussions of COVID-19 meaning rich pickings for fraudsters. Don’t let your clients fall victim.

Know what scams look like

Unfortunately the coronavirus pandemic has driven up the opportunities for fraud. Sophisticated methods are now being used by criminals to callously exploit both businesses and individuals worried about the state of the economy and their own financial situations. Some scams involve manipulating people into making bogus investments, whilst others look to harvest personal information and banking details.

As your client’s trusted accountant, you’re in the ideal position to help protect their business from unscrupulous fraudsters. This article looks at what the scams are so you can highlight them to your business clients who may be vulnerable.

Smishing

Smishing is when a text message is sent fraudulently which impersonates a trusted organisation such as HMRC, the government, the police or a bank. These texts usually ask the recipient to divulge financial and/or personal information.

Smishing texts (and emails) may also ask for some kind of relatively small financial support in exchange for a larger cash payment promised later on. Once a business owner gives up sensitive information, fraudsters can then use it to apply for credit or to siphon off company funds. This type of scam is incredibly common, and some texts and emails can look extremely convincing.

Investment fraud

The coronavirus pandemic has been hard on the economy, putting interest rates at an all-time low. This has made businesses and individuals with money to invest a target for fraud, with criminals promising strong financial returns for putting their money in bogus investments. Examples include spurious biotech companies, promising an imminent breakthrough in a COVID-19 vaccine that will “make millions for early investors”.

Fake antibody tests are another favourite. And whilst it’s easy to assume that no client of yours would ever get sucked in to such a fraud, the fact is a combination of highly convincing presentations and high pressure sales pitches often work.

In the course of your work as a clued-up business accountant, be aware of any new scams which crime agencies and the media make public.

Scams involving COVID-19 financial support

Criminals know that businesses have taken a huge financial hit in the wake of COVID-19, and they are looking to exploit this fact. With the government having offered a number of business supports during the coronavirus outbreak, there has been a rise in fake emails supposedly from government departments. These emails tend to offer grants of up to £7,500 to ailing businesses, but the links contained in them actually steal financial and personal information from victims for the purpose of theft.

Emails and text messages that look like they’re from HMRC are also common, many offering fake tax rebates. Some can also infect the user’s device with viruses.

Scams selling face masks, hand sanitiser and PPE

Businesses up and down the country have needed to secure large amounts of hand sanitiser, face masks and other items of PPE quickly for their customers and staff. But these all cost money, and are an added expense at a time when many are only just staying afloat.

Unfortunately, scammers are well aware that businesses are looking for the best deals possible on these things. This has led to a rise in cheap imitations that are of very little use in protecting against the virus. Hand sanitiser gels bought in good faith may not actually be sanitiser at all, and masks can be of extremely poor quality - that’s if the products ever arrive at all. The key takeaway message here is that if batches of masks, hand sanitisers or other items of PPE look too good to be true, then they probably are.

There are giveaways that can make scams more obvious

You just need to look for them. Encourage your clients to take these simple steps if they receive any potential COVID-19 scam communications:

  • Check to see if the website address is the same as that of the legitimate organisation
  • Have a look at the wording of the emails or text messages. Do they contain poor grammar, lots of spelling mistakes or general inconsistencies?
  • Don’t reply to calls, texts or emails that ask for personal or financial information, particularly passwords and PINs
  • Don’t be pressured into paying for something immediately without checking out the legitimacy of the company
  • If something is incredibly cheap then it’s likely to be cheap for a reason. Avoid.

Protect your clients (and your own firm) from expensive scams

As well as taking the steps mentioned above, discuss with your clients about the importance of keeping their computers, tablets, mobile phones and other devices up to date. Antivirus software should be installed and updated regularly too, which will offer the latest protection against viruses, Trojan horses and malware. Employees also need to know what scams typically look like and what they should do if they’re targeted.

My client has been scammed - how should they report it?

If your client - or indeed your own firm - has been targeted by fraud, it will need to be reported to Action Fraud, the UK’s national centre for reporting fraud and cybercrime. It can then be investigated further.

How we can work with you

Losing money to a scam means that businesses not only have less cash to survive but their plans for growth may have to be shelved too. At Myriad Associates we deal only in research and development tax relief as well as R&D grants and funding which can be highly valuable in these difficult economic times.

We’ve worked alongside a range of businesses and their accountants during our years in business. So if your client’s company is looking to innovate and grow, why not see about the funding options available to them on our R&D Grants and R&D Tax Credits pages. And when you’re ready to make a claim on your clients’ behalf, try out our excellent value, fully guided Tax Cloud portal for accountants too. Don’t let your clients miss out on the essential funding they need to grow.