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5 Deceptive Financial Practices To Watch During COVID-19

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5 Deceptive Financial Practices To Watch During COVID-19

Updated: July 12th, 2020

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The COVID-19 pandemic has brought many community and business leaders together like only a crisis can do. And while the outbreak has brought out the best in many people, it has unfortunately also brought out the worst in others. That’s why, as a business owner, you will want to familiarize yourself with some of the deceptive financial practices to watch for during COVID-19, so you don’t fall victim to any scams. 

Even the IRS, in the light of the stimulus funds it’s sending to Americans, warns that anyone contacting taxpayers for a fee or to disclose personal details is a scam. One thing you can worry less about is deceptive ads on Twitter or Google during COVID-19. Both companies have banned any mention of COVID-19 or coronavirus, including the good and the bad. 

While it’s unfortunate that anybody would try and take advantage of vulnerable people, especially during times of crisis, bad actors tend to use the same tricks with a new spin. As a result, it’s possible to spot them before it’s too late. Here are the deceptive financial practices to look out for and how you can identify them.

Tech scams 

Business owners may find that they have more in common than ever throughout this coronavirus crisis. For instance, those businesses that are shifting to work from home are undoubtedly discovering new ways to communicate, such as video conferences, instant messaging, etc.

The work-from-home trend has unfortunately become a breeding ground for scammers, who are preying on vulnerable businesses that are only just familiarizing themselves with the latest technology. 

For instance, be wary of IT-focused websites that come to you and offer to help with remote working. The scammers can identify companies whose staff are working remotely and access contact information on a business’ website to reach individual employees. The perpetrators then target them by masquerading as a help desk, convincing unsuspecting employees to download malware, and disclose sensitive data, such as healthcare information. 

Investment scams

It’s no secret that cash has become tighter than ever for business owners throughout the COVID-19 pandemic. Bad actors are looking to seize on this situation with deceptive financial practices, like making false promises of guaranteed investment returns even throughout the economic downturn.  

Be on the lookout for anyone offering zero-risk investments or who might be posing as the Federal Deposit Insurance Corporation (FDIC). The FDIC will never contact you randomly requesting information such as your bank account or credit card details. 

The U.S. Securities and Exchange Commission (SEC) has warned people to be on the lookout for online promotions that are nothing more than pump-and-dump schemes. These claim that a product or service will help cure coronavirus, and therefore the stocks of these companies will soar. Investment scams like this can even be found on social media platforms. 

Stacking MCAs 

A merchant cash advance (MCA) in and of itself is not evil. It’s merely a way to receive lump-sum funding now for your future credit or debit card sales. You repay the advance either with a percentage of your future sales or by agreeing to regular, fixed withdrawals from your bank account. 

There’s also a practice in the MCA industry known as stacking, which involves receiving multiple advances from different providers at the same time. Before you know it, you’ve stacked up a number of these things and are responsible for paying all of them concurrently. Stacking is risky because it can completely deplete any cash flow you have left. 

Deceptive financial practices to look out for here are any that involve behavior that is predatory toward business owners who realistically would never be able to repay so much debt. Be especially wary if the broker asks you to sign what’s known as a Confession of Judgment. While these are increasingly falling by the wayside, they are still out there. It’s a clause in the agreement that gives the MCA provider the right to seize a bank account or other assets if the business owner defaults.


Robo-calls are annoying enough when the doors of your business are open. Now, scammers are using the COVID-19 crisis as an opportunity to try and con business owners out of sharing personal information. A deceptive financial practice identified by the FTC involves a robo-call in which you’re prompted to press No. 1 if your small business is affected by coronavirus to be sure your Google listing is appearing correctly. The FTC is not, and would not be calling on behalf of Google.

Price gouging 

Amazon has been battling price gouging on its marketplace as high-demand items ranging from surgical face masks to hand sanitizer sold by third parties quadruple or more in price. If you are looking to arm your staff with face masks, be sure and watch out for this deceptive financial practice.  

Trust what you know to guard against deceptive financial practices 

When it comes to deceptive financial matters throughout the COVID-19 pandemic, the safest route is generally to remain vigilant and go with the tried-and-true lenders. There is no shortage of programs.  

In this time of crisis, U.S. lawmakers have passed economic relief via the Payroll Protection Program under the CARES Act, which specific online lenders have the approval from the U.S. Government to be a party to, including Funding Circle. Under this program, business owners with fewer than 500 employees may participate in the payroll protection program. 

If you qualify, you can borrow up to 2.5 times your average monthly payroll at an interest rate of no more than 1%. Any funds directed toward specific purposes, such as payroll, interest on your mortgage, rent, or utility costs over the eight-weeks between February 15 and June 30, will be forgiven. 

Funding Circle, the largest small business lending fintech is one of a few non-depository online lenders in the United States that was recently approved to provide Paycheck Protection Program loans. We offer the PPP application in four languages: English, Spanish, Mandarin and Hindi.  CLICK HERE.


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