Tabulating COVID-19-Related Fraud and Financial Loss

Tabulating COVID-19-Related Fraud and Financial Loss

INSIGHTi
Tabulating COVID-19-Related Fraud and
Financial Loss
March 31, 2021
Fraudsters have leveraged the Coronavirus Disease 2019 (COVID-19) pandemic to take advantage of
both individuals and organizations. Their schemes range from posing as representatives of a charitable
organization or government agency and tricking individuals into providing money or personal y
identifiable information (PII), to sel ing bogus or counterfeit treatments or vaccines for COVID-19 or
protective equipment and medical devices, that may or may not be delivered after victims submit
payment. Scammers have also tried to use stolen PII to gain access to and steal unemployment benefits
and economic impact payments provided pursuant to the Coronavirus Aid, Relief, and Economic Security
Act (CARES Act; P.L. 116-136) and other legislation aimed at providing COVID-19-related relief and
recovery.
While the pandemic has created new opportunities for fraudsters, they stil rely upon a number of tried-
and-true tools to scam victims or gain access to information, accounts, and resources. For instance, they
continue to make robocal s, phish for information through emails and social media, instal malware on
unsuspecting users’ devices, and exploit technology vulnerabilities. In addition, criminals leverage both
the surface web and dark web to facilitate these schemes.
In conducting oversight over federal law enforcement’s efforts to investigate COVID-19-related fraud and
the associated financial losses, policymakers may look to available data surrounding these scams to aid
them with their work.
Reporting COVID-19 Scams
There is no central repository where individuals and organizations report complaints of fraud, COVID-19-
related or otherwise. However, there are a number of reporting systems for the public to report suspected
incidents of fraud, and those systems may share information to help law enforcement collect and
deconflict public complaints about such incidents, including those related to COVID-19. Examples of
federal entities to which victims may report include the following:
 National Center for Disaster Fraud (NCDF). The NCDF is a repository for the public
to report complaints of disaster-related fraud to the Department of Justice (DOJ). It was
created in the wake of Hurricane Katrina and continues to serve as a resource for
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reporting fraud related to natural and man-made disasters. DOJ has directed the public to
report COVID-19-related scams to the NCDF.
 Internet Crime Complaint Center (IC3). The IC3 is a mechanism for the public to
report al types of internet-related crime to the Federal Bureau of Investigation (FBI).
Original y established as the Internet Fraud Complaint Center in 2000, it was renamed in
2003 to reflect the nature of the internet- and cyber-related crimes reported to the center.
In addition to providing information to law enforcement, the IC3 also shares alerts with
industry partners and the public.
 Consumer Sentinel. The Federal Trade Commission’s (FTC’s) Consumer Sentinel is a
mechanism for the public to report a range of consumer complaints to the commission,
which in turn shares these complaints with federal, state, and local law enforcement. The
Sentinel network provides law enforcement with tips on complaints, including fraud
involving consumer product scams, credit and telemarketing scams, and identity theft.
 FBI’s tip line. The FBI accepts tips on potential terrorist activity and reports of federal
crimes such as fraud—including COVID-19-related fraud. However, cal ers are directed
to report internet-based fraud to the IC3. (Other federal, state, and local law enforcement
entities have their own tip lines where individuals can report scams.)
Data on COVID-19-Related Scams
While there is no central repository for reports on COVID-19-related fraud, two of the entities discussed
above have published data that help provide snapshots of the nature and extent of this fraud.
 Internet Crime Complaint Center Data. The IC3 received 791,790 complaints in 2020
(a 69% increase over the 467,361 complaints received in 2019), involving more than $4.1
bil ion in reported losses. Approximately 28,500 of the complaints submitted to the IC3
in 2020 were related to COVID-19. Major categories of complaints related to COVID-19
include targeting CARES Act funds, particularly Unemployment Insurance, Paycheck
Protection Program loans, and Smal Business Economic Injury Disaster loans;
impersonating government officials and attempting to solicit money or gain personal
information; and, more recently, exploiting public interest in a vaccine to scam
individuals out of money and information. The IC3 did not report on money lost
specifical y to COVID-19-related fraud.
 Consumer Sentinel Data. The FTC provides daily updates regarding Consumer Sentinel
complaints related to COVID-19. Between January 1, 2020, and March 28, 2021, the
FTC received 411,661 such complaints, including 226,023 reports of fraud. Of these
fraud complaints, 42% reported financial loss, and these reported losses totaled $386.8
mil ion. The fraud categories with the most COVID-19-related reports have been online
shopping (e.g., unreceived goods complaints) and vacation and travel (e.g., refund and
cancel ation complaints).
Data Gaps
These data presented by the IC3 and FTC present snapshots of fraud, as reported by potential victims .
Notably, these self-reported data may not reflect losses to al individuals, as data are dependent upon
factors including the recognition that victimization has occurred and an individual’s choice of if, when, or
where to report (and research indicates that many crime victims do not report their victimization to law
enforcement). In addition, reported victims of fraud in these instances are individuals, not organizations
or government programs. There are a number of programs that have reportedly fal en victim to fraud,
including unemployment benefits, smal business grants and loans, and

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economic impact payments pursuant to the CARES Act and other relief packages. DOJ, through press
releases about arrests and prosecutions of individuals suspected of defrauding these programs, provides
examples of these scams and losses associated with specific cases. However, total program losses from
fraud are not included in the data presented by the FBI and FTC, thus limiting information about the
extent and financial effects of COVID-19-related fraud. Notably, the Internal Revenue Service, DOJ,
FTC, and other entities have cautioned about further economic impact payment scams that wil likely be
associated with the American Rescue Plan Act of 2021 (P.L. 117-2).

Author Information

Kristin Finklea

Specialist in Domestic Security

Disclaimer
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