With so much conflicting news and rumors about the Stimulus checks, fraudsters are rampantly creating stimulus fraud to steal innocent people’s money. Learn how you can protect yourself.

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Be careful

On March 27th, 2020 — as part of the CARES act, the government announced the release of stimulus relief checks to the American public in the amount of $1,200 per person (families also get $500 each, for children under 17). While the government estimated that it would take approximately 20 weeks for all of the checks to be distributed, it seem like the majority of the eligible population have already received their $1,200 sum by now.

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Record numbers of small businesses are closing due to the pandemic

That’s great news because with restaurants and other small businesses closing due to social distancing measures and massive layoffs rocketing unemployment rates in the country — a lot of people are hurting and in need of some help.

But sadly, along with this, the instances of fraud and scams related to this government relief effort have also been on the rise, as some dishonest people have been looking to take advantage of this situation and prey on the fears and desperation of those in need.

A recent NY Times article stated that amount of reported fraud and scam activity is rising at an alarming rate and according to an interview they did with the Identity Theft Resource Center, a California based non-profit that helps fraud victims — within the last few weeks, their traffic has spiked to over 850% higher than this same period, last year. And separately — Google also reports that the number of phishing emails they are intercepting in Gmail, over the course of a week, now tops over 18 million.

It’s safe to say that a lot of these first-round stimulus checks getting stolen and if we have a second round of stimulus funds coming, you’ll want to make sure you arm yourself with the knowledge to spot and avoid these scams.

So in this article, we’ll walk through some of the key details you need to remember about how the stimulus payments are dispersed, and then go over some common tactics that scammers use to try and deceive you. That way you can be aware of these tactics and take the steps you need to make sure you avoid them.

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Daniel’s Brew

Welcome to Daniel’s Brew — where I cover personal finance, investing, and career development topics.

So diving right into it — let’s start with some of the key pieces of information you need to remember about the stimulus package.

1) Know The Official Source Of Truth

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This is the IRS EIP Site

The main thing to know about the CARES act, the Stimulus Checks, and everything else that’s going on in the government related to this — is that the source of truth is always from an official US government site, like the IRS website (irs.gov), the US Department Of Treasury site (home.treasury.gov) or the main US Government site (usa.gov). In fact, these sites have a variety of pages on them that outlines, in black and white, all of the details of eligibility, down to the distribution process of these checks and an FAQs section that should answer most of your common questions. So if you’re ever in doubt about anything regarding these stimulus payments, make sure your check one of these sites first to see if you can find the answers there.

2) Know The Official Terminology

Secondly, it’s important to note that the official terminology that the government uses for these stimulus checks is the Economic Impact Payment. And this is important to remember because any official document from the government regarding this topic, including the actual stimulus checks, will have those words written on it — not “Stimulus Check” or “COVID Relief Check” or anything else that is similar.

3) Know The Official Methods Of EIP Distribution

The next thing to keep in mind is that the official methods in which the government provides you these EIP funds, is only through one of these 4 methods:

A) The first is direct deposit — if you have already registered your bank routing and account information with the IRS as part of any of your past tax filings. Basically, if the government already has an electronic method of providing you tax returns via direct bank deposits, that’ll be the same method they use this time for these stimulus payments as well. In your bank statement look for a line item in which the company name is “IRS TREAS 310” with a company entry description of “TAX REF.” That should be how your direct deposit instantiates in your bank statement.

If you want to be notified when you receive this payment, instead of having to log into your bank account every day — then simply go into your bank or credit union’s online site and sign up for direct deposit alerts. Most financial institution have a notification system that let’s you know when a new direct deposit has hit your account. And this way, you don’t have to tediously check every day to see if you’ve gotten your payment.

B) The second method of distribution will be by physical checks through the postal service. Now, I know most of you guys have probably received these checks in the mail already but the IRS anticipates that it’ll take about 20 weeks for ALL of the checks to be printed and distributed to everyone in the country — given their production capacity. But as of this past week, over 152 million people have already received their stimulus checks in the mail, so if you haven’t gotten yours yet, there is a good chance that it’s coming soon.

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Direct Express is a debit account you can open up to receive federal benefits like Social Security

C) The 3rd method of receiving this payment is through a Direct Express account — which is a debit account that is used to collect federal benefits for those that are receiving social security payouts or disability funds. This process is very much like a normal direct deposit — but just into one of these federal benefit debit accounts.

D) And most recently, the US Department Of Treasury announced that they will start sending nearly 4 million EIP payments via prepaid debit cards, instead of paper checks. These EIP Cards work like any other prepaid debit cards and recipients can make purchases and transfer funds to their personal bank accounts or do anything else that they could typically do with a pre-paid card — all without incurring any fees.

So that rounds out the methods in which you can receive your EIP.

4) Know The Government’s Method of Communication

And the last thing to keep in mind is that in no situation does an official government communication, come to you through a phone call, a text, a tweet, or a Zoom call or anything like that. They’re not going to slide into your DMs on Instagram or send you a Tik Tok video or utilize any other form of social media for any official communications. In fact, the official method of government communications is through first-class mail, but it’s pretty rare for any major body of the government to reach out to you personally, at all — unless they have serious precedent to do so.

In this particular situation, there are over 150M people that need to receive these EIPs — there is no way the IRS will be reaching out directly to individuals on any matter that’s regarding this topic. Rather, because of the sheer volume of inquiries on this matter, the government actually took an inverse direction on this recently, and they opened up a phone support line and started hiring 3,500 call center employees to answer some of the more common questions about the Economic Impact Payments.

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IRS adds phone support for EIP

So, you can actually reach out and speak to government representatives through this phone line — but the chances of the government proactively contacting you is highly unlikely.

So keeping those 4 fundamental details of the Economic Impact Payments top of mind, let’s transition to talking about the common ways in which scammers commit fraud to try to steal your check.

1) Verify Info Scam

The most common method I’ve seen to date — are calls or texts claiming they are from the IRS, or some other made-up financial processing center in the US government, that require critical personal information from you, otherwise the disbursement of your check will be delayed, or even canceled. If you accept these calls, they’ll typically ask you to verify your social security number, bank account numbers, home address, and any other type of personally identifiable information — in the hopes that they can steal your identity and falsely redirect your EIP to their accounts. Just remember, the official way to communicate information to the IRS, regarding the EIP payments, is ONLY through the Economic Impact Payments page on their official website. So, if anyone reaches out to you via phone or any other social media platform, regarding this topic — you can pretty much ignore it.

2) Fake Check Deposit Scam

Another fraud method that seems to be picking up, is the Fake Check Scam. This is how it works. First, they send you a fraudulent facsimile of the real EIP check and then ask you to deposit it quickly. Then, shortly afterward, you get either an email or phone call stating that the government paid you more than you were supposed to get — and they ask you to wire transfer some of the money back to them. Now, as you’ve probably guessed, the original checks that they sent over were fake and it takes on average 2–3 business days for a check deposit to process at your bank and for your bank to discover that it is fraudulent. But a wire transfer goes through almost immediately, and those transactions can be finalized within a matter of hours or even minutes depending on your bank or credit union. So with this scam, when the dust settles, you’ll have wire transferred some of your real money to these scammers, by the time the bank notifies you that your deposited check had bounced because it was a fake. Yeah — it’s pretty devious, right?

But here are the things that you can look out for, to help you identify these scams. First, as we discussed before, the official name of this economic relief is called the Economic Impact Payment — but most of these fake checks will say “Stimulus Payment” or Corona Relief Payment” or something along those lines. That’s your first clue that there is something fishy going on.

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Picture Credit: Janice Sarvey

Next — when you receive these fake checks in the mail, take a look at the postage area of the envelope that they come in. Most scams will have this written on them: PRSRT STD. It stands for Pre-Sort Standard and it is the designation used by the post office that matches most bulk mail and marketing collateral. It’s usually labeled for anything that has a large distribution and is not first-class — like Banana Republic catalogs and Costco coupon books. Anything important, by law, must always be sent to you via first-class mail — that includes any medical or utility bills, handwritten letters, statements of accounts, invoices, credit cards, and most importantly, EIP checks. In fact, as a general rule, I usually don’t waste my time even opening anything that isn’t first-class, no matter how official it looks, because I know that they always turn out to be advertisements or sales pitches.

3) Expedite Check Scam

This next type of scam, similar to the first one we talked about — is a call or text from some type of fake government agency claiming that they can facilitate your stimulus checks faster, for a processing fee. This one is an obvious fraud — it pretty much goes against the core philosophy and sentiment of this relief money. This is an economic relief effort — to help those that are struggling financially due to this pandemic, and that’s why these funds aren’t even taxed. This is tax-free money that the government is giving us to help us in these hard times. And the people that need it the most, need every dollar of that check. So it would be a bit disingenuous for the government to charge them an extra fee just to receive this aid sooner, don’t you think? I mean, this scam gets me the most upset — it directly preys on those that have the most immediate need for these funds, those that just got laid off and have no source of income or those that just had to close down their small businesses. These people have an urgent need for these funds immediately. These people are the ones that we should be supporting the most — and yet these scammers are purposely looking to kick them when they are down. It’s just despicable.

So — I hope this sheds some light on the fraudulent activity going on around the stimulus checks and gives you the confidence to identify and avoid these unethical methods of trying to steal your money.

It’s unbelievably disheartening to know that there are those out there that would prey on the struggling people in our country, in this time of economic hardship. These are the times that we need to rally together, support our neighbors, encourage our front line essential workers and stay strong minded to weather this biological and economic storm. But unfortunately, there are always going to be those people out there that only think about bettering themselves, no matter what the method or what the cost. So watch out for these people and these frauds — and please make sure you take care of yourselves, both physically and financially so that we can all come out of this, on the other side, stronger individually and stronger as a nation.

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The content here is strictly the opinion of Daniel’s Brew and is for entertainment purposes only. It should not be considered professional financial investment or career advice. Investing and career decisions are personal choices that each individual must make for themselves in accordance with their situation and long term plans. Daniel’s Brew will not be held liable for any outcome as a result of anyone following the opinions provided in this content.

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