President Biden Proposes $1.6B to Fight Pandemic-Related Fraud

White House

The Biden administration wants congressional approval for a $1.6 billion plan tackling COVID-related fraud.

The proposal, announced Thursday (March 2), would prosecute people who committed fraud related to the government’s pandemic relief funds, while also creating protections for victims of identity theft.

A White House fact sheet argues while the economic stimulus legislation in 2020 and 2021 “were essential to mitigating the health and economic impact of this unprecedented pandemic,” there needs to be a bipartisan effort to punish “those who engaged in major and systemic fraud against the American people during a time of national emergency.”

The administration is requesting $600 million to help investigate large-scale fraud by “criminal syndicates.” With this funding, the White House aims to expand the COVID-19 fraud strike force teams, which the administration says have already recovered hundreds of millions in stolen pandemic relief funds.

The White House says it is also seeking $600 million for fraud and identity theft protection, and $400 million to assist identity theft victims.

The news follows a report late last year from Congress that found tens of billions of dollars in losses related to fraud in the Paycheck Protection Program (PPP).

Launched after the pandemic, PPP offered businesses with under 500 employees low-interest loans of up to $10 million. As noted here last year, many of these loans were forgivable, but a large number of businesses receiving them turned out to be ineligible, if not fraudulent.

“The FinTechs facilitating these loan transactions did not have in place the proper controls to mitigate the impact of these bad actors; or were perhaps blinded by the fees they were reaping, which in certain cases exceeded $1 billion,” PYMNTS wrote.

The congressional report notes that the FinTechs say the Trump administration is to blame, arguing the program was poorly managed and allowed fraud to persist.

The White House is tackling pandemic-related fraud at a moment when fraud as a whole is getting more costly, according to recent findings from the Federal Trade Commission (FTC).

As PYMNTS reported Wednesday (March 1), an FTC report shows that consumers lost $8.8 billion last year to fraud schemes, a 30% increase from last year.

Imposter scams managed to take in $2.6 billion in 2022, though it’s a bit more measured than what has been seen with investment scams. The latest estimation is about $200 million higher than the $2.4 billion the FTC calculated for imposter scams in 2021.