Beware of Counterfeit Stimulus Checks

Pandemic doesn’t deter criminals hungry for your cash and sensitive data

Fraudsters across the U.S. are sending counterfeit stimulus checks to people in an attempt to con them into paying an advance fee or turning over personal data, the director of the Consumer Financial Protection Bureau (CFPB) warns.

“It’s fraud — it’s illegal,” Kathy Kraninger told AARP in an interview on pandemic-related frauds on the agency’s radar. The fraudsters sending fake checks could be after sensitive information, such as your bank routing number, says Kraninger, 45, a lawyer who has led the CFPB since 2018.

So-called “advance fee” fraud schemes aren’t new, but they adapt to the times. In the latest twist, crooks are trying to capitalize on Americans’ eagerness to receive their stimulus payments, made possible under a new law called the CARES Act, to make rash choices and divulge personal details that should be kept private.

On April 2, the Internal Revenue Service (IRS) warned consumers that the tax agency would not call them and ask them to verify financial information to get a stimulus check — or to get it faster. The IRS cautioned that scammers might mail bogus paper checks and tell consumers to call a number or substantiate certain information online to cash it.

80 million stimulus payments delivered

More than 80 million stimulus payments — what the IRS calls economic impact payments — already have gone out to Americans via direct deposit, federal officials said Saturday, though some consumers still are waiting for theirs. The payments are up to $1,200 per individual, or up to $2,400 for a married couple. People with eligible dependents under 17 may qualify for an additional $500 payment per dependent. Paper checks are starting to go out this week.

Fraudsters who successfully obtain personally identifiable information such as a Social Security number can commit an array of financial crimes. According to the CFPB, federal agencies are working with the IRS to alert people to scams related to the stimulus payments. Key points from the consumer protection bureau:

  • Generally, the IRS will first contact you by mail, not by phone.
  • The IRS will not insist upon a payment through a prepaid debit card, gift card, money order, wire transfer or other vehicle.
  • Federal agencies with jurisdiction over such illegal practices will work “to stop these scammers and their ill-conceived practices and … enforce the law,” a CFPB spokeswoman says.

The CFPB, an independent agency headquartered near the White House, was begun in 2011 in the wake of the financial and housing crises and Great Recession. Most of its roughly 1,500 staff members, including Kraninger, now are teleworking as they strive to ensure that banks, credit unions, credit card issuers, lenders including mortgage firms, debt collectors and other financial firms treat their customers fairly.

Two more COVID-19 scams

The CFPB has issued alerts about two other kinds of COVID-19 fraud, advising:

  • Older Americans should be on guard against scammers who prey on them by offering to pick up groceries, medications or supplies — but run off with the cash and leave consumers empty-handed.
  • Online shoppers seeking in-demand products — such as medical or cleaning supplies — should avoid unfamiliar sellers on the internet who advertise such goods but in reality don’t have them. Use an established delivery service, order directly from a store or take advantage of grocers and pharmacies offering contactless delivery, the CFPB says.

Talking about fraud prevention, Kraninger, who hails from suburban Cleveland, says she’s counseled her parents to never provide information to someone over the phone or in an email. “Hang up the phone or go to a trusted source,” she says. If there’s a purported issue with a credit card, call the customer service phone number on the back of the card, Kraninger says, and don’t accept someone’s word that they represent the card issuer.

“We all get busy. We all get distracted,” she says. “You have to be incredibly skeptical and vigilant.”

Kraninger, who years ago helped start up the Department of Homeland Security after the attacks of Sept. 11, 2001, says despite cybersecurity training she once almost fell victim to a phishing scam. With phishing, a bad actor emails, calls or texts you to trick you into sending cash or disclosing personal information. Or the communication is intended to allow the perpetrator to infiltrate your computer and steal sensitive data.

The CFPB enforces 20 federal laws, including the Truth in Lending Act and Truth in Savings Act. With civil enforcement powers, it acts against predatory companies and has returned billions of dollars to harmed consumers. The agency also works to educate consumers to empower them to make informed financial decisions.

Reprinted from AARP Fraud Watch Network