The Illinois Credit Union League is sharing a scam alert in light of recent fraudulent SBA deposits.
“As we face a world trying to recover from a pandemic, scammers are out in force taking advantage of the most vulnerable,” the alert states. “We need to remain on guard and urge our members to do the same.”
The New York Credit Union Association’s compliance department is currently working with at least one credit union member to investigate a possible fraudulent SBA deposit, said Sarah Hodgens, the Association’s director of compliance.
According to the Illinois Credit Union League, credit unions have reported members receiving ACH deposits representing SBA disaster relief payments to inactive or non-business accounts. The payments are labeled “SBAD TREAS 310,” which commonly denotes SBA EIDL, and may have the company ID of 9101036151.
“While details of the scam are limited, credit unions have described an advance fee scheme,” the alert states. “That is, fraudsters are recruiting your members to receive EIDL payments via ACH. The member is instructed to keep a certain amount of the payment and send the remaining to the person who is directing the activity.”
The alert outlines the following guidelines and tips regarding SBA deposit scams that credit unions should be aware of:
ACH guidelines
- If the credit union returns an ACH credit you believe is fraudulent, use Return Reason Code R23 (credit entry refused by receiver) or R03 for a name mismatch or R17 for an invalid account number initiated under questionable circumstances. The use of R17 requires “Questionable” to be inserted in the first 12 positions of the addenda record.
- Under NACHA Operating Rules, the credit union is not liable for funds resulting from fraudulent ACH credit entries if the funds are no longer available in the member’s account. NACHA rules provide the ODFI warrants to the RDFI that the entry is correct and properly authorized. If the RDFI posts a fraudulent credit to the account number in the entry, and the funds are withdrawn, the RDFI is not liable for the funds.
- The credit union cannot return partial funds. The NACHA Operating Rules require return entries to contain the same dollar value as the original entry. A partial return of funds must be handled outside the ACH network (e.g., with a wire transfer or official check), or with a new credit entry agreed to by both institutions.
- If you receive a warrant from the Secret Service or other law enforcement agency requesting a return of fraudulent funds, you should only return whatever is left in the account.
Risk prevention tips
- Manually review incoming ACH credit entries to identify suspicious records.
- Be aware of members that withdraw the entirety of funds received from the ACH deposit.
- Many members may have rightfully applied for SBA relief loans. Verify the legitimacy of the member’s business prior to returning or releasing potentially fraudulent funds.
- Close their account and/or file a suspicious activity report, as necessary.
If your credit union suspects SBA fraud, it can be reported to the SBA’s Office of Inspector General, attention Special Agent Brett Lehnert, at https://sbax.sba.gov/oigcss/.