In December 2019, the world witnessed an outbreak of a new coronavirus known as SARS-COV-2, which began in Wuhan, the Hubei province in China. In March 2020, The World Health Organization (WHO) indicated about 124,847 confirmed cases and 4613 deaths in 118 countries. Countries like China, Iran and Italy imposed widespread quarantine, and on March 9, 2020, Italy imposed quarantine for the entire population 1Zirkle, J. (2020). Coronavirus fraudsters add to the anxiety and misery. Fraud Magazine .
Due to the COVID 19 pandemic, the world has been in a state of emergency for the past two years. Global health crises have a significant impact on human lives. Uncertainties due to the COVID-19 pandemic is causing a radical changes in societal norms, damaging business operations, and hampering economic growth.
The pandemic has led to an unheard-of and unexpected global situation, with people, organisations, and governments facing difficulties. The efforts by certain governments to reduce the effect of the pandemic has caused long periods of disruptions, closure of services and limitations of travel across continents and within countries. In some cases, countries have experienced severe shocks and even the collapse of supply chain systems.
Similarly, the COVID-19 pandemic has ushered many employees out of their jobs while other resorted to working from home to maintain productivity and compliance with the new public health rules. As working from home became the new standard, criminal organisations got busy with their creativity, taking advantage of the general panic to engage in new fraudulent behaviors and phishing scams affecting vulnerable people.
Organisational effect of Covid 19
As per a survey conducted by the Association of Certified Fraud Examiners (ACFE) in late March and early April 2021, about 83,677 anti-fraud professionals were invited to give their opinion on how the COVID-19 pandemics has impacted their organisations with the below summary of the survey.
According to a survey conducted by ACFE during the early stage of the COVID-19 outbreak, it was discovered that more than 51% of the organisations revealed more fraud than usual since the beginning of the pandemic. 71% of respondents said they expected the level of fraud impacting their organisations to increase. More than 50% of the respondent expected to see an increase in fraud risk. 38% of respondents said they expected to see an increase in the budget for anti-fraud programs, the most common area for investment in most organisations. According to the survey results, a shift in business operations and changes in consumer behaviour are the most critical risk factors. The challenges faced by anti-fraud programs during this pandemic are changes in the investigative process and changes in the control/operating environment. It was also revealed that 80% of organisations had implemented one or more changes to their anti-fraud programs due to the pandemic. According to the survey result, more than 50% of respondents believe increased fraud risk awareness and organisational collaboration will be more effective in the post-pandemic era 2Association of Certified Fraud Examiners & Grand Thorton. (2021). The nest normal : preparing for a post pandemic fraud landscape .
The emergence of new fraudulent activities due to the COVID-19 pandemic
Due to the radical change in societal norms, business operations, and consumer behaviours, criminals have also sort to changing their pattern and even how they carry out their fraudulent activities and, as a result, the emergence of new types of fraud which include the ones listed below.
Scammers create fake websites and send malicious attachments asking to donate money via charities or crowdfunding to people affected by COVID-19, submit their financial information through their credit cards, and download malware from attachments. Also, fraudsters create fake investment opportunities in the United States by indicating that public companies trading with a product that can prevent, detect, or cure COVID-19 will drastically increase in the Stock Exchange market. In the US, scammers are contacting people using social media, door to door visits, and telemarketing calls, offering COVID-19 tests and sanitary kits to Medicare beneficiaries in exchange for personal information. The fraudster will then use the stolen information to commit medical identity fraud by fraudulently billing the United States Federal Health care program 3Tressler, C. (2020, February 10). Coronavirus: Scammers follow the headlines. Retrieved from Federal Trade Commission: https://www.consumer.ftc.gov/blog/2020/02/coronavirus-scammers-follow-headlines .
Clinical trial COVID-19 scams are other fraudulent forms of behaviour that emerged thanks to the COVID-19 pandemic. To prevent the spread of the virus, the United States federal government invested billions of dollars in producing vaccines. Nevertheless, before these vaccines are certified to be used, they need to go through the trial phase. According to the United States federal trade commission, fraudsters create fake websites to entice volunteers to COVID-19 trials. Once one visits the phoney trial site, they are promised a doctor’s care, payments, and are asked to register by providing their social security, credit card or bank account number 4Kreidler, J. (2020, October 23). COVID-19 clinical trial: real or fake? Learn how to tell the difference. Retrieved from Federal Trade Commission: https://www.consumer.ftc.gov/blog/2020/10/covid-19-clinical-trial-real-or-fake-learn-how-tell-difference .
A funeral expense scam is another fraudulent behaviour that emerged during the pandemic. Those who have lost loved ones due to COVID-19 might be eligible for government programs that pay funeral expenses. A family who lost loved ones due to COVID-19 will get up to USD 9000 from the United States Federal Emergency Management Agency (FEMA) to cover funeral expenses. Scammers are contacting those who have lost family members because of COVID-19 to get personal or financial information about the deceased, claiming they wish to assist in the registration process for funeral expense benefits 5Bureau, C. F. (n.d.). Resources to help you avoid scams. Retrieved from Consumer Financial Protection Bureau: https://www.consumerfinance.gov/coronavirus/avoiding-scams/ .
According to the United States department of justice, a fraudster was convicted for care act fraud for falsifying a loan application for the Paycheck Protection Program created by the United States Congress, as part of the USD 2 trillion care act. He was charged with cheating an estimated 12.8 million USD in the coronavirus relief aid dedicated to small businesses. It was reported that the fraudster lied to lenders claiming he had 500 employees, while he had less than 150 employees 6Grube, N. (2020, September 30). Prominent Hawaii Defense Contractor Arrested For CARES Act Fraud. Retrieved from Honolulu Civil Beat: https://www.civilbeat.org/2020/09/prominent-hawaii-defense-contractor-arrested-for-cares-act-fraud/ .
Furthermore, the coronavirus stimulus check scam was another documented fraudulent behaviour. The United States Congress passed a bailout package with stimulus checks involving about 150 million households. Fraudsters disguised as government employees tried to extort the households eligible for the stimulus check package by requesting financial information (PayPal account information, Social Security number, bank account number), asserting that this process was indispensable for receiving their promised funds 7Tompor, S. (2020, March 28). Stimulus check scammers ask you to sign up for PayPal account. Don’t do it. Retrieved from Detroit Free Press: https://eu.freep.com/story/money/2020/03/26/stiumulus-check-scam-paypal-coronavirus-covid-19/2918722001/ .
According to the European Union law enforcement agency (Europol), new fraudulent behaviours have emerged thanks to the COVID-19 pandemic, adversely affecting business processes. Dummy websites offering fake news about COVID-19 or presenting themselves as charitable organisations are stealing personal information or infecting website visitors with malware. Another fraudulent behaviour is the emergence of fake applications offering relevant details about COVID-19; meanwhile, they contaminate devices with ransomware or malware through the application download. Another fraudulent behaviour detected by Europol is the emergence of fake investment opportunities related to products or services claiming to prevent, detect or cure COVID-19. Money mules are another form of fraudulent behaviour identified by Europol, a form of money laundering whereby the fraudsters create fake Non-Governmental Organisation (NGO) and solicit online workers via phoney job advertisements. The recruits will process donations for the fight against COVID-19 and transfer the money from their account to the fraudster’s account, while keeping a commission for themselves 8Europol. (2021). COVID-19: FRAUD. Retrieved from Europol: https://www.europol.europa.eu/covid-19/covid-19-fraud .
Conclusion
As explained above, the COVID-19 pandemic has brought tremendous impacts in all aspects of our daily lives, in our way of behaving, doing business, and even societal norms. This has led to the change of attitude from fraudsters who need to adapt to the changing environment. The fact that employees are working from home has created additional opportunities for fraudsters. It becomes more challenging to protect the personal computers and phones they use while doing their jobs. As new fraudulent behaviour emerge, organisations and governments need to increase the resources allocated to fight fraud. Government and organisations need to increase their investment in training Anti-fraud professionals on how to tackle these new types of fraudulent behaviour, as explained above, while respecting the recommendations to reduce the spread of the COVID-19 pandemic.
