Stimulus Check Frauds: How To Identify And Prevent Such Scams

stimulus check
Stimulus Check

The federal government has sent millions of Americans three rounds of stimulus checks and a host of other separate measures that in all gave Americans hundreds of billions of dollars. Both the Internal Revenue Service and the Dept. of Treasury moved in quickly once they got the clearance from the top leadership and sent out millions of payments.

But this huge amount has also brought in criminals as they try to divert such funds and prevent them from reaching deserving people. The Federal Trade Commission (FTC) has reported that American consumers lost more than  $200 million to stimulus check scams during the pandemic and after. 

The first round of stimulus checks went out at a slower pace than the second and the third. Both these rounds of payments were marked by the fall in the number of direct paper stimulus checks and the increase in the number of direct deposits to bank accounts. The mailed payments arrived either as paper stimulus checks or mailed preloaded debit cards. 

The distribution process was hastened to help low and moderate-income Americans get their hands on the stimulus checks earlier. But this also led to an increase in the rate of scams and scammers used innovative methods to deprive people of these relief payments. 

The IRS has resorted to various measures to prevent such scams and has also warned people to follow the payment guidelines and wait for the payments to arrive. 

Some of the common stimulus check-related frauds that the authorities have warned to look out for, include online and offline offers to speed up the payment process for the stimulus check in exchange for either a fee or a percentage of the stimulus check. 

The IRS has repeatedly warned that the arrival of the stimulus check is a normal process and there is no way anyone can hasten the process by paying any official or other persons. Applying for a special program will also not reach any official.

Any call or text persuading you to verify information in exchange for receiving your stimulus check faster is a dangerous attempt to steal various pieces of information which will later be used to defraud money in your bank account. 

Fake Stimulus Check Scams Have Also Increased After The Second Economic Impact Payments

The IRS and other government agencies will never request you to give them information about the economic impact payments that should be either online or by calling you up. 

You could also receive unsolicited emails or postal mail that may contain fraudulent checks or fake EIP debit cards. Scammers have resorted to the use of sending out fake stimulus checks or EIP debit cards. In exchange, they are asking people to send them money through gift cards or wire transfers. 

Such fake stimulus checks scams became intense in the second and third rounds of stimulus checks. 

The federal or state governments have never resorted to calling up or mailing beneficiaries and instructing them to return the check amount. 

Detecting And Reporting Fake Stimulus Check Or Other Online Payments 

You must learn to recognize fake stimulus checks and other online payment methods. Fake stimulus checks might look like personal or business checks, money orders, cashier’s checks, or checks that come in electronically. 

In such fake stimulus check scams, a person calls you up and instructs you to deposit a check. The sum mentioned is way more than what the IRS owes you. It could run into tens of thousands of dollars. 

The caller at the other end tells you to return a part of the money or forward it to another person. They always come up with convincing reasons to convince you to part with that money. 

They say that they cannot keep all the money as they have to cover taxes, or fees for any price of a huge sum. They might also convince you that they might need your help to cover income tax or fees for a prize. They also say that they would need money to buy supplies for a job, to return one that was overpaid, or some equally convincing reason that on the face of it appears plausible. 

But these are organized scams and there is a way you can spot them. 

Ways Scammers Try To Steal Your Stimulus Check

The ways that scammers adapt to relieve you of your check money are varied. Here are some examples. Scammers pretend to hire you as a mystery shopper. They tell you that your first assignment is to evaluate retailers that sell money orders, gift cards, or wire transfer services such as MoneyGram or Western Union. You get a check with instructions to deposit it in a personal bank account and wire some of the money to someone else. 

But the moment you do so, the money disappears and along with it your employer. Check grounds increased by a whopping 84 percent in the two years following the COVID-19 pandemic in 2021 and 2022. This was revealed by the US Dept. of Treasury. Stimulus frauds increased as multiple payments were being sent out by the federal government totaling hundreds of billions of dollars. Fraudsters stole checks from the mail and made big money. They altered them and then sold them on the dark market. They also hired mules and walkers to deposit the fake stimulus checks. 

Around 680,000 stimulus check frauds were detected in 2022. This forced the Financial Crimes Enforcement Network to warn American financial institutions about the upsurge in stimulus check fraud that was targeting the postal services. The FCEN and the US Postal Inspection Service joined hands to identify potential breach areas and helped financial institutions and banks detect, identify, report, or prevent any suspicious activity that could be linked to mail theft linked to stimulus check fraud. 

But officials admit that tracking stimulus check fraud that uses the postal services will not stop the problem alone. Banks have been negligent in investing in check processing technology for years. But the surge in fraud has forced them to consider new tools to tackle the mounting losses due to check fraud.