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# Preventing fraud and identity theft

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## Content

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Don’t let small business scams damage your finances and hard-earned reputation. Use the following resources to learn how to prevent, detect, and report identity theft and fraud.

###         What SBA is doing to prevent fraud      

SBA’s pledge is to combat fraud and engage all employees in setting an anti-fraud tone that encompasses the agency’s culture. Fraud control in agency programs and operations is integral to responsible stewardship of taxpayer resources and effective service delivery to the American public.  

In the agency’s FY2022-2026 Strategic Plan, the agency is committed to its Strategic Goal 3: Implement Strong Stewardship of Resources for Greater Impact with strategies focused on increased fraud risk management. Consequently, the agency continually seeks to improve internal controls, develop fraud risk registers (i.e., as needed), and increase fraud risk management training for employees.

Since the early months of each of the COVID-19 pandemic relief emergency  programs, SBA has screened borrowers for potential fraud, waste or abuse. SBA has had dedicated teams to both receive tips concerning potential fraud as well as to report suspected fraud to law enforcement agencies.

SBA has taken action to restore fraud measures in COVID-19 pandemic relief emergency programs, enhance fraud controls in new programs, as well as support cross-agency efforts to bring fraudsters to justice. 

These actions include the establishment of SBA’s Fraud Risk Management Board (FRMB) in February 2022, which serves as the agency’s designated anti-fraud entity responsible for overseeing and coordinating SBA’s fraud risk prevention, detection, and response activities. 

The FRMB is composed of experienced agency executives across the SBA enterprise and is designed to ensure that fraud risk management activities are properly designed and executed at the appropriate levels within and across program and support offices. While the FRMB serves as the agency-wide oversight body, responsibility for managing fraud is placed on SBA officials at all levels.

*“Pandemic relief programs, including those supported by President Biden’s American Rescue Plan, have driven a historic economic recovery, including saving millions of businesses and creating over 13 million jobs since 2021. SBA’s COVID relief programs were large-scale and significant undertakings; and the agency has analyzed, evaluated and taken action to incorporate the latest methods and technologies along the way...to fight fraud and hold bad actors responsible, as well as...to ensure future emergency small business programs are optimized from the start. SBA has taken important steps to close the door on fraud, waste, and abuse and ensure billions of dollars in taxpayer-funded COVID relief make it into the hands of small business owners.”* – **SBA Administrator Isabella Casillas Guzman**

You can learn more about what SBA is doing, together with law enforcement partners like the Department of Justice, to combat fraud in SBA programs and scammers taking advantage of small business owners by clicking on each of the links below.
                        - Administrator Guzman Announces Expanded Efforts to Aggressively Crack Down on Bad Actors and Prevent Fraud in Programs
                        - Enforcement efforts to combat COVID-19 relief fraud
                        - U.S. Small Business Administration Releases Report on Anti-Fraud Control Measures in Pandemic Relief Programs
                        - Statement by SBA Administrator Guzman on President Biden’s Pandemic Anti-Fraud Proposal
                        - U.S. Small Business Administration Statement on the House Select Subcommittee on the Coronavirus Crisis Report Concerning Fraud in the Paycheck Protection Program
                        - Statement by SBA Administrator Guzman on the Signing of the Paycheck Protection Program and Bank Fraud Enforcement Harmonization Act and the COVID-19 Economic Injury Disaster Loan Fraud Statute of Limitations Act

In 2023, SBA released a report detailing analysis of anti-fraud protocols put in place in each of SBA’s four largest pandemic programs entitled “Protecting the Integrity of the Pandemic Relief Programs.” Most notably, SBA’s anti-fraud report estimates **that 86% of fraud originated in the first nine months** of the COVID-19 pandemic. Since that time, SBA has strengthened its anti-fraud framework for identifying and reporting fraud and is committed to ensuring that lessons learned in fraud risk management have an immediate as well as long-term impact on policy and program design.

## Understanding fraud

###         What is fraud?      

Fraud involves obtaining something of value through willful misrepresentation. (See U.S. Government Accountability Office, “A Framework for Managing Fraud Risks in Federal Programs” July 2015, for an introduction to fraud risk management principles and best practices)

Examples of fraud include, but are not limited to, the following: 
                        - Embezzlement
                        - Forgery or alteration of documents
                        - Unauthorized alteration or manipulation of computer files
                        - Fraudulent financial reporting
                        - Misappropriation or misuse of agency resources (e.g., funds, supplies, equipment, facilities, services, inventory, or other assets) 
                        - Authorization or receipt of payment for goods not received or services not performed 
                        - Authorization or receipt of unearned wages or benefits 
                        - Conflict of interest, ethics violations

For additional information on what fraud involves, visit U.S. GAO Interactive Antifraud Resource. 

###         Who is responsible for fraud recognition?      

All levels of SBA leadership are responsible for maintaining a system of internal controls which prevent, detect, or deter fraudulent or dishonest conduct. Each leadership/management team member is expected to recognize risks and exposures inherent within their area of responsibility and be alert for any indication of irregularity. SBA management should contact SBA OIG as soon as fraud is detected or suspected.

SBA employees who know or suspect fraudulent acts are responsible for reporting such activity to their supervisor. However, in the interest of confidentiality or if the employee is uncomfortable reporting to them, the employee may notify the Office of Inspector General directly by one of the methods described below under Report Fraud, Waste, and Abuse in SBA Programs.

Employees who report suspected fraudulent activity or misconduct will be protected from reprisal or retaliatory action. Whistleblowers should not confront the individual under suspicion or initiate investigations on their own. It is against the law and SBA policy to retaliate against employees who provide information or report allegations of waste, fraud, and abuse to OIG. OIG also has a role in protecting whistleblowers, and SBA personnel may contact the OIG whistleblower coordinator to learn about their rights at Whistleblower Protection.  

IMPORTANT: All claims of fraudulent activities must be made in good faith. Baseless allegations, made with disregard for truth or accuracy, or frivolous complaints are not appropriate. 

###         What is fraud risk?      

For SBA purposes, we define a fraud risk as:

A vulnerability that bad actors might exploit to fraudulently obtain benefits. It is an intentional and concealed threat designed to cause harm to the agency by exploiting the natural vulnerabilities that exist within the overall internal control structure.

SBA assess fraud risks continuously. SBA values the review, detection, and monitoring of risks, as well as compliance with oversight and legal mandates.

###         Who is responsible for fraud risk?      

It’s everyone’s responsibility!
                        - SBA Administrator
                        - Office of Performance, Planning, and the Chief Financial Officer
                        - Fraud Risk Management Board
                        - Program Managers
                        - All SBA Employees

## SBA fraud risk management highlights at-a-glance

SBA has embarked on a journey to implement and sustain a mature fraud risk management program that encompasses the elements of the U.S. Government Accountability Office (GAO) Fraud Risk Management Framework, federal government best practices and professional standards in fraud and enterprise risk management as well as internal controls.

The increase in the scope and magnitude of SBA’s programs along with the advancement of complex fraud schemes has created a need to strengthen the Agency’s vigilance against fraud. 

SBA has achieved many accomplishments as it relates to implementing a more robust and mature SBA Fraud Risk Management Program through the optimization of financial resources and overall minimizing fraud in its programs and operations. 

For example, SBA now has:
                  - Full-time staff and contractor support dedicated to implementing fraud risk management strategies.
                  - A cross functional team of expert SBA personnel to assist the FRMB design and implement policies and strategies to prevent, detect and address fraud risks enterprise- wide.
                  - A framework to formally assess fraud risks, in SBA programs as well as in SBA operations.
                  - An early-stage data analytics program to evaluate fraud risks across SBA programs. 

These are just a few of the many strategic goals SBA has accomplished to ensure that the Agency can successfully and effectively deliver programs and resources to small business owners.

## Learn to protect yourself

### Be alert against scams and fraud schemes

If it sounds too good to be true, it probably is. A good first step is to be aware of the most common types of fraud and to know how to guard against identity theft. The Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) offer helpful resources:
                  - Common types of fraud and scams (CFPB)
                  - Learn how to spot identity theft (CFPB)
                  - Scams that target small businesses (FTC)

### Monitor your personal and business credit

If you suspect that someone has stolen your identity and fraudulently used your Social Security Number or Employer Identification Number, it is important to monitor both your personal and business credit reports. 
                  - Read the FTC's  Free Credit Report  article to learn how to monitor your personal credit.
                  - To monitor your business credit, you can get a copy of your company's report from Experian, Equifax, Dun & Bradstreet, or several smaller credit reporting services.

## SBA's response to fraud and scams

*"SBA has taken important steps to close the door on fraud, waste, and abuse and ensure billions of dollars in taxpayer-funded COVID relief make it into the hands of small business owners*.” - **Administrator Isabella Casillas Guzman. **

Since the early months of each of the COVID-19 relief programs, SBA has screened borrowers for potential fraud, waste or abuse. SBA has had dedicated teams to both receive tips concerning potential fraud as well as to report suspected fraud to law enforcement agencies.

You can learn more about what SBA is doing, together with law enforcement partners like the Department of Justice, to combat fraud in SBA programs and scammers taking advantage of small business owners.
                  - Administrator Guzman Announces Expanded Efforts to Aggressively Crack Down on Bad Actors and Prevent Fraud in Programs
                  - Enforcement efforts to combat COVID-19 relief fraud

### Lenders and fraud response

All lenders who originate loans in PPP have an obligation to mitigate fraud waste and abuse in SBA programs.   In addition, lenders are required to follow existing U.S. Department of Treasury guidance with regards to reporting suspicious activity.  The Department of the Treasury's Financial Crimes Enforcement Network provides guidance for SBA lenders and other financial institutions on combatting fraud, waste, and abuse in COVID-19 relief programs.

#### What lenders can do:

                  - Report  suspicious activity consistent with Bank Secrecy Act rules to FinCEN  (PDF)
                  - Report suspected fraud or illegal activity to  SBA’s Office of Inspector General
                  - Report potential fraud, waste, or abuse to SBA’s Office of Credit Risk Management by emailing  OCRM@sba.gov  or  OCRMFraudNotification@sba.gov
                  - Report potentially fraudulent activity concerning specific programs or activities also to the following mailboxes:                     - PPP fraud referrals ( PPPFraudReferrals@sba.gov )
                    - ID theft complaints ( PPPIDTheftInquiries@sba.gov )
                    - RRF fraud referrals ( RRFFraudReferrals@sba.gov )
                    - Asset Seizures and Forfeiture Notices ( PPP.ACH.Inquiries@sba.gov ) 
                  - Request SBA review an outstanding loan for identity theft by submitting the  SBA Declaration of Identity Theft form

Together we can ensure that taxpayer dollars go to eligible borrowers.

## Report fraud, waste, or abuse in SBA programs

SBA’s Office of Inspector General provides insights and tips on what to look for to protect your business from grant fraud, loan fraud, or phishing schemes related to SBA economic stimulus programs.

You can report fraud, waste, abuse, or mismanagement of federal funds involving SBA programs, operations, or personnel to the SBA Office of Inspector General Hotline. Information collected through the Hotline helps keep SBA's Inspector General aware of risks and trends that affect the SBA’s programs.

The Department of the Treasury's Financial Crimes Enforcement Network provides guidance for SBA lenders and other financial institutions on combatting fraud, waste, and abuse in COVID-19 relief programs.

## Report identity theft to SBA

If you suspect that someone used your personal information without your knowledge or permission to obtain an SBA loan, please see our step-by-step instructions on how to report identity theft to SBA.