a16z Podcast

Pandemic Relief and Fraud: Willful Deceit or Design Defect?

Sep 4, 2020

Bharat Ramamurti, an original member of the COVID-19 Congressional Oversight Commission, discusses the challenges of the Paycheck Protection Program (PPP) and its susceptibility to fraud. Naftali Harris, CEO of SentiLink, highlights innovative technologies to combat synthetic fraud in relief efforts. Alex Rampell, a fintech expert, critiques the inequitable distribution of funds, favoring large corporations over small businesses. Together, they explore lessons from international responses, flaws in government disbursement, and the pressing need for improved oversight in future relief efforts.

40:20

Creator website

Episode guests

Alex Rampell

Naftali Harris

Bharat Ramamurti

AI Chapters

Episode notes

Intro

3min

Fraud and Oversight in PPP Disbursement

6min

Comparative Economic Responses to the Pandemic: Lessons from Abroad

2min

Disparities in Pandemic Relief: Big Corporations vs. Small Businesses

2min

Reimagining Government Disbursement Systems for Relief Funds

2min

Challenges in Small Business Lending During the Pandemic

4min

Fraud in Pandemic Relief: A Deep Dive

13min

Assessing the Impact of the Paycheck Protection Program

10min

This episode examines the potential for misuse and fraud among those applying for the Paycheck Protection Program (PPP)—and how fintech and software provide overlooked tools to stop it.

On March 27th, the government enacted a $2.2 trillion dollar stimulus package called the CARES Act, the largest aid measure in history. The act provides more than $500 billion for the Paycheck Protection Program, or PPP, a low-interest, forgivable loan program designed to help small businesses and self-employed individuals retain workers and stay afloat during the pandemic. Since March, the Small Business Administration has approved billions of dollars in PPP loans. But it is also estimated that U.S. losses from coronavirus-related fraud and identity theft have reached almost $100 million. According to the New York Times, the Small Business Administration’s fraud hotline has received 42,000 reports about coronavirus-related cheating and misuse; by comparison, last year it had less than 800.

To date, the Department of Justice has charged more than 40 cases of PPP-related schemes, from claiming non-existent employees or non-existent businesses to identity theft, kickback schemes, fake tax documents, and multi-state fraud rings. Most of those cases have alleged fraud of more than a $1 million. But what about the countless others that may be cheating taxpayers out of smaller—but not insignificant—sums? How does the government decide who should get money and who shouldn’t among millions of applications from businesses of all industries and sizes—and what role do banks play? How does the program then distribute that money quickly and accurately—or not, in many cases? And what tools are at our disposal to catch those who cheat the system?

Host Lauren Murrow is joined by Bharat Ramamurti, the original member of the COVID-19 Congressional Oversight Commission, which is tasked with evaluating the impact of coronavirus relief loans; Naftali Harris, the CEO of SentiLink, a software company that builds technology to detect synthetic fraud; and a16z fintech general partner Alex Rampell.