Fraudulent UK COVID Loans Jump in Value

The British government has seen a spike in the value of fraudulent COVID emergency loans.

Figures released Thursday (Sept. 14) by the Department for Business and Trade showed the value of those loans rising by 572 million pounds.

According to the report, the department identified 1.69 billion pounds ($2.11 billion) as “the total drawn value flagged by lenders as suspected fraud” as of June 30. That’s up from 1.18 billion pounds recorded for the period ending March 30.

“These data points are reliant on lenders’ fraud tolerance thresholds,” the report said. “A loan facility is marked as suspected fraud where a lender has determined that there are sufficient grounds to suspect that fraud may have occurred, and further investigation is warranted.”

The report adds that cases of suspected fraud don’t always yield actual fraud, and the designation of a loan as “suspected fraud” does not indicate wrongdoing by the borrower.

A report last year by the U.K. Department for Business, Energy and Industrial Strategy (BEIS) found that more than $1 billion in COVID relief loans involved irregularities such as fraud, with the agency estimating the government issued 990 million pounds (or $1.1 billion) in “irregular” grant payments.

While the BEIS has said the government was working to reclaim those funds, its report added that “due to the prioritization of getting money out of the door, the majority of payments made in error are unlikely to be recovered by the Department.”

The report also found that around 8% of claims from the 47-billion-pound Bounce Back Loan Scheme for businesses were fraudulent, but acknowledged that figure could be higher.

On the other side of the Atlantic, efforts are underway to deal with COVID-related fraud, with the White House proposing a $1.6 billion anti-fraud plan.

A 2022 Congressional report discovered tens of billions of dollars in losses tied to fraud in the Paycheck Protection Program (PPP), which offered businesses with fewer than 500 employees low-interest loans of up to $10 million.

As noted here last year, many of these loans were forgivable, though a number of businesses receiving them turned out to be ineligible or 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.