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Fraud Alerts and Prevention

Last Reviewed: October 2020

Information is coming out very quickly regarding Coronavirus and COVID-19, including information on the government’s economic impact payments (stimulus checks). It seems just as quickly that scammers are finding new ways of trying to steal money or personal information from consumers using calls, text messages, or emails. Below are several articles providing information that may be valuable to your members on what to look for and how to avoid these types of scams.

Fraudulent SBA Disaster Relief Payments (added 7/9/2020)

Credit unions are reporting that members receiving ACH deposits representing SBA disaster relief payments are being received in inactive or non-business accounts.  The payments are labeled “SBAD TREAS 310” – which commonly denotes SBA Economic Injury Disaster Loan (EIDL) and may have the company ID of 9101036151.  Some payment amounts exceed $10,000.

While details of the scam are limited, credit unions have described an advance fee scheme.  That is, fraudsters are recruiting credit union members to receive EIDL payments visa ACH.  The member is instructed to keep a certain amount of the payment and send the remaining to the person who is directing the activity.  If the credit union is experiencing SBA fraud, please report it to Special Agent Brett Lehnert with the Small Business Administration – Office of Inspector General at brett.lehnert@sba.gov.

ACH Guidelines:

  • If the credit union returns an ACH credit you believe is fraudulent, use Return Reason Code R23 (Credit Entry Refused by Receiver) or R03 for a name mismatch or R17 for an invalid account number initiated under questionable circumstances. The use of R17 requires “Questionable” to be inserted in the first twelve positions of the addenda record.
  • Under NACHA Operating Rules, the credit union is not liable for funds resulting from fraudulent ACH credit entries if the funds are no longer available in the member’s account. NACHA Rules provide the ODFI warrants to the RDFI that the entry is correct and properly authorized. If the RDFI posts a fraudulent credit to the account number in the entry, and the funds are withdrawn, the RDFI is not liable for the funds.
  • The credit union cannot return partial funds. The NACHA Operating Rules require return entries to contain the same dollar value as the original entry. A partial return of funds must be handled outside the ACH network (e.g., with a wire transfer or official check), or with a new credit entry agreed to by both institutions.
  • If you receive a warrant from the Secret Service or other law enforcement agency requesting a return of fraudulent funds, you should only return whatever is left in the account.

Risk Prevention Tips:

  • Manually review incoming ACH credit entries to identify suspicious records.
  • Be aware of members that withdraw the entirety of funds received from the ACH deposit
  • Many members may have rightfully applied for SBA relief loans, Verify the legitimacy of the member’s business prior to returning or releasing potentially fraudulent funds.
  • Close their account and/or file a suspicious activity report, as necessary.
  • Contact Special Agent Brett Lehnert at the email address provided above.

The Cybersecurity and Infrastructure Security Agency (CISA) Resources

Federal Trade Commission Resources

Scammers are taking advantage of fears surrounding the Coronavirus. The Federal Trade Commission has specific Coronavirus Scam information and tips to avoid them:

FinCEN Resources

The Financial Crimes Enforcement Network (FinCEN) has issued alerts and guidance to financial institutions related to the COVID-19 pandemic. Certain communications relate specifically to fraud and scams, including imposter scams, investment scams, product scams, medical scams and insider trading.

IRS Warnings – Coronavirus-related scams

The IRS urged taxpayers to be on the lookout for a surge of calls and email phishing attempts about the Coronavirus. These contacts can lead to tax-related fraud and identity theft. The IRS indicated that they will not call and ask you to verify or provide your financial information so you can get an economic impact payment or your refund faster.

NCUA Resources

The NCUA Board is issuing this alert to inform credit unions about the risk of fraud associated with the COVID-19 pandemic. Those committing fraud often attempt to take advantage of opportunities made possible through new or expanded large government programs arising from emergency situations, such as the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

Resources Related to Treasury Checks

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