Pandemic Relief and Fraud: Willful Deceit or Design Defect?

Sep 4, 2020

Guest

Alex Rampell

Guest

Naftali Harris

Guest

Bharat Ramamurti

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.

Ask episode

AI Snips

Chapters

Transcript

Episode notes

INSIGHT

Transparency Issues in PPP

The government's limited transparency in disclosing PPP loan recipients hinders fraud detection.
Only 20% of recipients, those with loans above $150,000, are publicly known.

ADVICE

Leverage Fintech for Verification

Use existing financial data APIs to verify PPP loan applicants' information.
Directly access bank, credit card processor, and payroll data for more reliable verification.

INSIGHT

Contrasting Relief Approaches

Denmark's COVID-19 relief program, which covered payroll costs regardless of business size, stabilized unemployment.
The US approach, with varying support based on size, saw unemployment jump from 4% to 20%.

Get the Snipd Podcast app to discover more snips from this episode

Get the app

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.