TruNarrative is asking the British parliament to create a National Task Force to investigate Bounce Back Loan fraud. The company made its case in an article written by TruNarrative Banking Head Edward Vaughan, who is also a former National Crime Agency (NCA) Officer.
In the article, Vaughan broke down some of the problems with Britain’s Business Bounce Back Loan Scheme (BBLS), which set aside billions of pounds to help small businesses struggling to stay afloat during the COVID-19 pandemic. Under the BBLS, a business could borrow anywhere between £2,000 and £50,000, on terms that were favorable to the borrower.
The problem, according to Vaughan, is that the government didn’t do a good job of vetting the people who received those loans. The government handed out £44.74 billion to 1.9 million applicants through the BBLS program. Now the Department for Business, Energy & Industrial Strategy and the British Business Bank have estimated that as many as 60 percent of those applicants could default on their loans, which would result in a loss of as much as £26 billion.
Of course, that loss cannot be entirely attributed to fraud. Many of the defaults will be legitimate businesses that could not survive the economic crisis, even with financial assistance. They are therefore truly unable to repay the money they borrowed from the government.
Other cases, however, may be more nefarious. The government relaxed its formal credit and affordability assessments while rolling out the BBLS, and while Vaughan acknowledged that the government needed to act quickly to help people during the pandemic, the lax security measures made it easy for fraudsters to exploit the system. For example, criminals that filled out multiple applications, or filled out applications for fake businesses, may have gone undetected because the government was not verifying the information on their claims.
Vaughan argued that the government could have avoided that problem had it followed proper best identity verification best practices, which include biometric and document checks. In the meantime, he believes that a dedicated BBLS fraud task force, operating under the NCA, could help recover some of the missing funds. He encouraged parliament to set aside tens of millions of pounds for such a project, noting that the investigations could expose more criminal activity.
TruNarrative itself launched a new identity verification solution for small businesses earlier this year. The company provides other organizations with Know Your Customer solutions to help remove risk from the onboarding process.