Rise in Fraud from COVID-19 Bounce Back Loan Scheme
Fraudsters are stealing the money around £400M from taxpayers in the UK through the support loans given due to the COVID-19 pandemic.
The major banks of the UK said that they have seen a major spike in the fraud rate due to the bounce-back loan. The spike is around five times higher than normal.
The fraudsters can make around £420m after loans supported by the government. A senior employee from HSBC states that the scheme is being targeted by criminals particularly.
The Treasury Select Committee discussed this with the head of commercial banking UK at HSBC, Amanda Murphy, “We’ve seen criminals this year repurpose their infrastructure and amend how they interact with us . . . . exploit the fears that have come around pandemics, particularly around the supply of PPE.”
Susan Allen, Chief of business banking at Santander UK confirmed that her bank was facing the same issue of fraud.
— Oscar Williams-Grut (@OscarWGrut) December 15, 2020
Small scale businesses or even startups can take £50,000 in loan due to the Bounce Back initiative. This initiative was to help the struggling businesses in these tough times of the COVID-19 pandemic. This means that taxpayers are about to face losses.
More than £40 billion has been loaned by the banks to businesses in various industries and supported by the government completely. The government will give a 100% return of the money to banks if there are losses on the loans that are not paid back.
“If the fraudster gets through and they self-certify something and they lie, then that will be a claim against the taxpayer,” said Anne Boden, chief executive of Starling Bank. “That is the consequence of this scheme.”
The banks do not carry proper checks on the bounce back loans to reduce the time of the application. However, this minimal check leads to fraudulent activities.