Law enforcement officials say the culprits are for Kovid-19 relief through the most popular app to illegally send and receive money illegally.
Cash apps, Venmo, Zelle and PayPal have become portals to transfer money easily, making it difficult to trace transactions.
“I have, in my 28 years of experience, seen the amount of fraud I currently see,” Roy Dotson, assistant agent for the Secret Service’s special agent, told CNBC. “And I think it’s completely based on the amount of the Carr Act allocated to Kovid-related fraud and incitement.”
Dotson said that fraudsters get the so-called “money mule” to deposit money into the fund, then transfer them from one account to another in an attempt to hide the source of the fund. He described the amount of fraud as “unavoidable” based on the size of the program.
“Just the amount of money, you’re going to try to take advantage of that money by various criminal organizations and individuals, basic scam artists,” he said.
The Secret Service has 700 investigations pending paycheck protection program and unemployment insurance relief program. Dotson said in a growing number of those cases, the suspects used an app to transfer the stolen money.
A spokesman for the judicial department said that 80 defendants have so far been accused of attempting to steal more than $ 240 million from the PPP program.
Law enforcement officials say some of the frauds are essentially hiding in plain sight.
Take the case of Fontrell Antonio Baines, better known as “Nuke Bizzle”. In a music video posted online, he said about getting rich by stealing Kovid-19 unemployment benefits. The video has a disclaimer that says it was produced for entertainment purposes only.
But a federal criminal complaint filed in October claims otherwise. The rapper is facing charges of fraud, aggravated identity theft and interstate transportation of stolen property in connection with receiving more than $ 1.2 million in pandemic unemployment assistance benefits.
The complaint states that officials say the money was allegedly stolen: Bain and his co-planners submitted applications for unemployment benefits that contained incorrect information. They then obtained debit cards filled with fraudulent benefits and mailed them to various addresses and then made cash withdrawals while shopping at ATMs or in stores.
According to the complaint, some funds were accessed via money transfer on the cash app.
Baines has pleaded not guilty. He declined to comment through his lawyer.
Local law enforcement officials say the explosion of fraud is directly related to criminals, who target users of desperate apps for quick cash due to the epidemic. In these cases, fraudsters often entice users on social media to send money for products that do not exist or as part of a larger scheme to steal their money.
Detective Jason DeLuca of the Coral Springs Police Department in Florida said, “It’s a degree of hiding in plain view, because they’ll say, ‘Listen, listen, this is a perfectly legitimate business opportunity.” “And I think they use that blatantly specific advertisement to say, ‘Obviously if it was a fraud, we wouldn’t advertise on social media that way.”
DeLuca and his partner, Detective Ricardo Pena, have also seen an increase in criminal activity during the epidemic.
“It’s very easy for a cheater, because there are so many people who legitimately need this money,” Pena said. “So the federal government decided that, ‘Let’s make it as easy as possible and as fast as possible for people to get money.”
Pena said that the technology used by criminals to fund the Cars Act fund is similar to other schemes that exploit the ease and anonymity of moving money through an app.
“If you’re a bad guy, you find a way to get money illegally. Now the money is in your account and they are able to transfer it to this peer-to-peer platform,” Pena said. ” Once in that peer-to-peer platform, they will go ahead and send it to different accounts. It can be their own account or there may be other partners who are sending money to them. “
He said that transfers are done very soon so that cash can be withdrawn at the earliest.
Schemes targeting such app users who are desperate for quick cash are posted on social media. Many posts on Instagram and Facebook, for example, provide different ways to send and receive money through one of the apps.
“They’d be like, ‘Hey, listen, that $ 1 you sent me, I could make it $ 10.’ And they’ll be like, “Okay, so what is to lose? A dollar is not a big deal,” Pena said. “Then what we will see is developing trust. They are like, ‘All right.’ Is, it worked with dollars. Let me make $ 10. ‘So $ 10 would probably turn into $ 20, maybe $ 50. That’s how they continue to develop the trust. “
The data, compiled by Aptopia analyzing mobile app data, online complaints on Google Play and the App Store about fraud and scams, has increased this year, with Cash being the most related to the app.
The Better Business Bureau also confirmed that there has been an increase in complaints this year with most targeting PayPal, including fraud and scams.
All four App executives told CNBC they have aggressive anti-fraud measures in place and actively monitor paranormal activity.
A Cash App spokesperson said, “Preventing fraud is important to the Cash app. We continue to invest in fraud-fighting resources by increasing staff and adopting new technology. We are constantly improving systems and controls to help prevent, detect and report bad activity on the platform. “
The company recently released an AI-powered feature that marks potential spam or scams for payment in the app and sends text messages to users upon detection of suspected fraud.
A spokesperson for Venmo and PayPal stated that the company takes every instance of potential fraud very seriously and that we work with law enforcement agencies and industry partners to quickly mitigate potential issues. PayPal and Venmo deploy a series of measures to stay ahead of anticipated growth in online criminal activity, including enhanced transaction monitoring to detect unusual patterns in making payments through our platforms. We also use key word tracking, suspicious case reporting, sanctions and watch list enforcement and other sophisticated fraud detection models to protect our customers. “
Zell has not disclosed fraud detection methods, a spokesperson said, but has a strong consumer education program.
“Since Zelle is offered primarily through the mobile banking apps of hundreds of financial institutions, we encourage consumers to contact their bank or credit union immediately if they believe they are a victim of fraud or scam Has happened. After the consumer reports the incident, their bank or credit union will partner with Zelle with a protocol to prevent and cease any future activity, ”Zee’s network operator Early Warning Services said in a statement .