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April 7, 2020

Maine small businesses, individuals should be wary of COVID-19 scam surge

Multiple resources for businesses and individuals to recognize and report scams are available.
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Scammers are using the COVID-19 crisis to steal money from both businesses and individuals in a variety of ways, officials from financial, consumer and government agencies warn.

The U.S. Department of Justice, the Federal Trade Commission, U.S. Sen. Susan Collins, R-Maine, and state finance and banking departments have all issued alerts about scams related to the health crisis and its economic impact in recent days. 

Scams were already a concern a month ago, when the U.S. attorney for Maine appointed Daniel J. Perry, a senior prosecutor in the Portland office, as COVID-19 fraud coordinator, overseeing federal prosecution of coronavirus scammers.

"Criminals are already taking advantage of the anxiety caused by the coronavirus outbreak to peddle fake cures, send phishing emails from entities posing as the World Health Organization or the Centers for Disease Control and install malware on apps designed to track the virus,” said U.S. Attorney Halsey B. Frank, who made the appointment.

The number and variety of scams have increased since the $2 trillion CARES Act, which provides relief for both businesses and individuals, became law March 27.

Payroll protection loans fraud

One scam that's emerged is related to the Keeping American Workers Paid and Employed Act, with provides $377 billion through loans to small businesses, and other programs. Fraudsters have been contacting employers, telling them that they must pay a fee to apply for a Paycheck Protection Program loan, one part of the act. The loans are designed to to help keep staff paid during the pandemic.

There is no application fee to apply for the loans or any other elements of the wide-ranging program.

"This is a another reminder of how ruthless criminals are in seeking to steal from hardworking Americans during a time of economic hardship," said Collins.

Banks, as well as the government are urging businesses to take the same protections individuals would in avoiding unsolicited help with any aspect of the package, and to deal with a trusted lender when applying for a loan or grant related to the CARES Act, or other relief program.

Investment scams

Maine Securities Administrator Judith Shaw warned investors to be on guard.

Investment-related scams always accompany times of national concern, such as weather-related disasters and health scares, she said.

“Scammers will be targeting investors, capitalizing on recent developments in the economy and preying on concerns about the regulated securities market,” said Shaw. “Investors must remain vigilant to protect themselves. Your best resource in avoiding these scams is knowledge."

Schemes aimed at investors include:

  • Private placements and off-market securities are a threat to retail investors because private securities transactions are not subject to review by federal or state regulators.
  • Gold, silver and other commodities sales that are not tied to the stock market are often promoted as “safe” or “guaranteed” as hedging against inflation and mitigating systematic risks. Scammers may conceal hidden fees and markups, and the poor liquidity of the assets may prevent retail investors from selling them for fair market value.
  • Buy-low sell-high recovery schemes, including investments tied to oil and gas, equity discount sales and more. "Investors need to appreciate the risks associated with any prediction of future performance and recognize that gains in the markets may not correlate with the profitability of their investments," Shaw said.
  • Get-rich-quick schemes about as scammers falsely tout their ability to quickly earn guaranteed returns that can be used to pay rent, utilities or other expenses or recoup portfolio losses.
  • Replacement and swap schemes by unlicensed person, who encourage an investor to liquidate and use the proceeds to invest in more stable, more profitable products. Advisers may need to be registered before promoting these transactions and are legally required to disclose hidden fees, markups and other costs.
  • While real estate investments may prove appealing, they present significant risks, and changes to the economy and the real estate market may negatively impact the performance of the products. 

Shaw said the bottom line is that investors must ask questions and research the investment and person offering it.

Investors should always ask if the salesperson and the investment is licensed or registered, something that can be confirmed by the Maine Office of Securities. Investors also can check the SEC’s Investment Adviser Public Disclosure database or FINRA’s BrokerCheck. Avoid doing business with anyone who is not properly licensed.

Individual relief check scams

Superintendent of the Maine Bureau of Financial Institutions Lloyd LaFountain warned of scams aimed at individuals involving direct payment checks, which should start arriving for many individuals in the coming weeks.

“Unfortunately, scammers will very likely try to exploit the program to engage in ID theft and to defraud innocent people of their payments. Everyone is reminded to remain vigilant during the current crisis and be wary of any requests for personal information,” LaFountain said in a news release.

The checks will be automatically distributed people who have filed taxes in the past two years, with no action required for most people. Social Security beneficiaries don't have to file to receive a payment; payments will be automatically deposited into their bank accounts. Some people who don't normally file returns will have to to get their check. 

LaFountain warned of mail, email, phone calls or other communications from fraudsters who claim to provide quick access to the money.

"You should never provide personal account information or other personal information in response to an unsolicited email, text or call," he said. "Government agencies, financial institutions, and other legitimate organizations do not request personal account information in such a manner."

Business, individual protecting themselves

Shaw and others warned of "phishing" scams — fraudsters who claim they're tied to the U.S. Centers for Disease Control and Prevention or the World Health Organization, or offering "expert" medical advice or services, as well as offers of "miracle cures," fraudulent charities and schemes tied to government assistance or economic relief.

All those warning of scams offered similar advice for individuals and business owners as the first defense:

  • Don't click on links in email or text messages unless you are confident it is not a scam. Clicking the link may expose personal information to scammers and harmful software.
  • Never provide personal account information or other personal information in response to an email, text or call. A bank or credit union does not request personal account information in such a manner.
  • Recognize suspicious links in emails. Check the “From” header — if the name of the author of the email does not match the author’s email address in the header, this is a sign of a scam. Hover the cursor over a link in an email without clicking the link; the address for the link will appear onscreen. If it is different from the address the email purports to come from (a bank, or government organization), it's likely a scam. 

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