Could bounce-back loan fraud be stopped by this simple extra step?

Jonathan Craymer
·
November 23, 2020

Anyone who cares about the world remaining “civilised” post-Covid must be horrified to hear that fraudsters have taken advantage of UK government generosity - making off with billions via fraudulent bounce-back loan applications.

 

The heartlessness displayed by those committing such crimes is appalling. The Bounce Back Loan Scheme (BBLS)was a generous initiative designed to keep businesses afloat: so to see it and our country being robbed blind by criminals, while innocent people get dragged nto it through their names being used, is enough to make one weep.

 

How can fellow human beings behave like this?

 

It's not clear exactly what percentage of the total cost of unpaid loans are down to fraud, but some estimates suggest the UK government may have lost a staggering £26 billion. Up to 60% of these emergency loans may never be repaid according to the National Audit Office.

 

Yet once again, as with so many fraud-based crimes, the problem clearly starts with the apparent inability of banks, building societies (and others) to check reliably that applicants really ARE who they say they are.

 

The government deliberately lowered the bar on security checks, as so many businesses were clearly struggling, and it was thought to be a Good Thing to reduce the amount of red tape required. But the law of unexpected consequences kicked in, and the floodgates for widespread fraud were flung open.

 

Cabinet Office Minister Julia Lopez said: "It's a gross injustice that fraudsters are shamefully taking advantage of measures set up to help people during the [first] lockdown. We can't let criminals profit from the Covid crisis, as every pound stolen by fraudsters could be invested in our vital public services".

 

Perhaps the victims hit hardest are entirely innocent individuals who have been shocked to discover that fraudulent applications for loans have been made in their names. One such is Sue Burgeon, who found her identity had been stolen. Another is Mark Telling who learned his name was used to steal £50,000 from the bail-out scheme. He told reporters:"It’s going to worry us to death", fearing he will be held liable for the debt and that his involvement may damage his credit rating.

 

Money-laundering investigator Martin Woods told the BBC: "Ultimately it will be our children and grandchildren who will pay for all this. Criminals have identified it as a fabulous opportunity".

 

So why on earth, in this digital age, is it still so difficult to authenticate users quickly and with certainty? Martin lays the blame squarely on inadequate checks being made.

 

We believe it would move things along if users were forced to undergo a full KYC (Know Your Customer) check, involving lots of big data questions (where they once lived, what refrigerator they bought five years ago etc) - but just ONCE.

 

Thereafter they could prove whothey were in a few seconds with a simple one-time code, such as Shayypeprovides. Surely that would help stop these heartless crooks in their tracks?

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